In June 1997, a rumour went round Oxford that the budget for one of the big college's summer balls was a quarter of a million pounds. To anyone not involved, the idea that a committee of students, whose business experience turned on selling mugs through Young Enterprise and balancing tabs at the bar, could be put in charge of a such a major sum was hilarious. In February 2000, there is a rumour going round about two first-year students who are poised to float their online revision service on the stock market next month for a figure 10 times the ball budget. This time, however, nobody is laughing.

The small but growing number of students setting up companies from their college bedrooms is beginning to make the activities of the ball committee look like Fisher Price finance. There can scarcely be an undergraduate alive who has not been grinding their teeth over the fortunes of Student-Net.co.uk, the online service founded by four finalists at Nottingham Trent university that attracted a £10m investment from a US firm of venture capitalists last month.

Hardly a day seems to go by without a report of some new bright spark making his first million before passing his A levels. CyberBritain.com, the fastest growing online network in Europe, has a 17-year-old chief executive. And last week, Oxygen, a firm of financiers set up to fund student business ideas, was valued on its first day of trading at a mind-boggling £240m, more than double the annual turnover of Nottingham Trent university.

This is more than another breathless chapter in the saga of the e-commerce boom; it marks a very real shift in the culture of student life, where not long ago even the most ambitious undergraduate was content to chisel the perfect CV out of captaining a university club, doing work experience at Goldman Sachs and honing his self-importance in the union debating chamber.

"When I was at college, ambitious students saw university as a time to burnish their CVs by being president of the debating society, and so on," says John McLaren, the 48-year-old non-executive director of Groupe Chez Gerard, which owns a string of restaurants across Britain. "Then, the key skill for a student was to position yourself at the moment of graduation so that you got an A-stream job where you could move up a monolithic system." McLaren did this by getting a summer job at a demolition company and embroidering it with the same canny self-promotion as his fellow students.

Today, it seems, you are an also ran if you haven't made your first million by the time you graduate. "In the current economic climate, when the cost of education has risen substantially, everybody who goes to university views it as an investment in themselves," says Alan Edmondson, 22, one of the founding members of Student-net, a sort of web version of the student union handbook. He and the other three - Peter Atalla, the 21-year-old who came up with the idea, Michael Haycock, 23, and John Woodcock, 22 - are among the first generation of students who have had to pay for their degrees and it has had a galvanising effect on their productivity. "Students in America have long had to work their way through college, which teaches them a certain business discipline," says McLaren, and so it is now in Britain.

With the help of the £10m capital injection from IMPG, a Nevada-based venture capitalist, the four Student-net founders have opened two offices in Nottingham, two in London and are taking on 15 new people over the next fortnight. Edmondson's attitude towards his staff is revealing. "Since we've started employing people ourselves, we've realised how valuable we are in the marketplace," he says. "I interviewed someone today who was a law graduate with a 2:1 and a masters in business, but he didn't have a clue."

Edmondson's casual self-assurance comes from an industry in which there is no received wisdom to accumulate and no rites of passage to slog through; this is a gold-rush panic in which youth is valued above experience. "It wasn't seriously possible to start a business when I was at college," says McLaren. "Without computers and the internet, what could you do apart from a glorified paper round? And where would you go for funding, because the bank sure as hell wouldn't lend a student the money."

Step forward Oxygen, or rather, Emma Edelson, the 26-year-old daughter of Michael Edelson, the Manchester United director with whom she set up the company to specialise in financing student projects. Members of the board include PR executive Matthew Freud and Keith Harris, former chief executive of HSBC Investment Bank. From an initial investment of £1m in five start-up companies, it floated on the stock exchange last Friday for £240m. "It isn't a case of students thinking, oh my god, I've got all this studying to do and my business to set up," says Edelson. "It generally grows out of having fun and spotting a gap in the market."

Since starting six months ago, Oxygen has received more than 100 business plans, half of them from students. Some package their ideas professionally, others ignore the protocols and pitch themselves, shakily, over the phone: both are acceptable. "The problem for students with business ideas has always been that unless you have a business plan and partnership agreements, you will not be taken seriously," says Edelson. "You don't have the time or knowledge to find out how everything works."

The difference in today's climate, is that students with no practical experience in running a business, will still be courted for the value of their unrefined ideas. "There is a shake-up in people's attitude to age generally," says McLaren. "The fact that they have seen 23-year-olds successfully run internet companies, has shown how little age should be a determinant in giving people responsibility."

Benjamin Cohen is 17. When he was 13, he was diagnosed with ME and was forced to spend long periods of time confined to his home in north London. "I hadn't been into the internet much before that, but I started using it as a way of keeping in touch with the world. I realised how powerful it was for reaching people at low cost."

Cohen, like a lot of teenage programmers, began idly constructing a website around his interests. With a £150 loan from his father, he bought the domain name JewishNet.co.uk and when he stumbled across the email address for the chairman of the Durlacher Corporation, a colleague of his father's and the financial backer behind the hugely successful Soccernet, Cohen secretly sent him a précis of the site. Durlacher phoned the boy's father and advised him to broker a deal. In eight weeks time, JewishNet will be floated on the Alternative Investment Market and Ben Cohen will start revising for his A levels.

The manner in which Cohen came to be the chairman of two sizeable companies (the other being CyberBritain.com, a rudimentary search engine that is none the less growing faster than any other online network) at 17 years old, is typical of a student business ethic that views work as the natural extension of recreation. "A lot of the ideas that come in have been conceived at the pub over a drink," says Edelson.

'Now that the whole concept of a monolithic career is starting to go, what matters more is personal networks," says McLaren. The combination of youth and success isn't new, of course, but it has been more common in acting or writing, areas that tolerate a certain amount of precocious immaturity. For the student entrepreneurs, however, there can be no allowances made for youthful caprice. Shareholders require a level of constancy that it is hard to imagine a first-year student putting up with. "The thought of having all this potential money on our shoulders puts us under huge pressure," says Rose. "Once the venture capitalists have invested, they're going to want to see something more than just Jordan and me running the company."

Rose and Mayo are having an untypical first year at university. Rose, studying politics, philosophy and economics at Oxford's Lady Margaret Hall, is woken by the phone each morning at 9am. He goes to lectures during the day, writes business plans at night, and spends one day a week, usually a Thursday, in London with Mayo - who is reading economics and management at Hertford College. On March 20, during the Easter holidays, the pair plan to launch their on-line revision service, revise.it, built out of the proceeds from the sale of their last company. On a typical day in London, they will attend their first meeting at 10am and have subsequent meetings - with fundraisers, advertisers and marketing managers - every hour until 7pm.

"Our general self-confidence has helped and we have motivated each other," says Rose. "But there are loads of young people who have cool, creative ideas. The only difference is that our idea came at a time when we had the summer after A levels to work on it."

There is more to it than luck, however. Two years ago, translating a student business idea into a bona fide company would have been almost impossible, as Robert Jenkins found to his cost. When he was a second year economist at Jesus College, Cambridge, he had an idea. The 19-year-old was already a seasoned entrepreneur, having speculated his student loan on the stock market and made enough money to fund his degree. But when he made a tentative pitch to City financiers, he was laughed out of the room. "I approached a few venture capitalists and they wouldn't really open the door to a student. I didn't know how to present a business plan or anything."

Jenkins retreated, licking his wounds, and after graduation worked for Deutsche Bank for nine months until he had gained the right skills to resubmit his idea - an investment web service he is wary of detailing before the launch. At 22, he has been taken on by Oxygen and is preparing to launch yellowturtle.com in March with a business partner who is still at university. "If I had been able to launch this service three years ago, it would have blown everything else away," he says regretfully. "It is still a solid idea, but back then it was revolutionary. You have to do this things when you think of them, because in a year or two, they won't be competitive."

"There is a certain window of time for these entrepreneurs to make their mark," says Emma Edelson. "The capital valuations are crazy and I'm pretty sure the bubble will burst."

Getting in quick has its disadvantages. Apart from trying to juggle management meetings with Descartes essays, Rose has been the target of some snide comments in the college laundry room. "Someone said, 'oh, I don't think internet millionaires did their own washing.' We're having to cut down significantly on social life, but hopefully when we get backing, we'll be able to bring in a manager."

"Certain members of staff didn't take it particularly pleasantly that the boss was 17 years old," says Cohen. His diffidence triggers a rare concession to the fact that he isn't 45. "I'm having to make decisions that I don't really want to." Like what, exactly? "Like, how many desks we should have and what colour the walls should be. Sometimes I think it's pressure I don't really need."