Startups look to business plan competitions

Mark Cannice — Thu, 19 Jun 2008 13:38:58 -0700

When it comes to launching a successful venture, everyone has heard the typical high-tech startup stories: A group of young founders setting up a workshop in a basement or garage, a business plan scribbled on the back of a napkin at a local coffee shop, an employee with big ideas leaving the frustrations of corporate life and striking out on his or her own.

But there's another road to success that a growing number of entrepreneurs are following: Business plan startup competitions.

Consider Mobius Microsystems, a venture-backed firm that is an innovator in analog and mixed signal designs, or MicroMRI, a company that specializes in medical devices and aims to become a leader in the non-invasive assessment of osteoporosis. Both firms were seed ventures founded by graduate students, and both won the University of San Francisco International Business Plan Competition, in 2003 and 2004, respectively.

Today, many universities arrange contests for their own students and/or alumni. A few, including the University of Texas at Austin, San Diego State University, and the University of San Francisco, organize ambitious events that host graduate students from universities across the nation and around the world.

The struggle for entry into these events can be quite intense, with the inter-university contests often selecting only one in every four or five applications for presentations. If selected, students must provide extensive details on their venture and travel cross country or across an ocean for a three- or four-day marathon of high-intensity presentations and meticulous questioning from venture capitalists, attorneys and seasoned entrepreneurs who judge the contests.

As founder and director of the annual USF Competition, I've had a chance to survey several executive judges and graduate student entrepreneurs. Katie M. Miller, a graduate student at the University of Michigan and co-founder of GIDEON, a venture that provides computer aided design software for nanotechnology research, indicated to me that the involvement of venture capitalists in the contest provides expertise and perhaps even a shot at future funding opportunities. Katie's team made it to the final round of five teams from among the 20 semi-finalist teams that presented.

Social ventures are also increasingly appearing at these events. For example, Xavier Alpasa, SJ, a graduate student at Ateneo de Manila University and founder of Rags2riches stressed the international and democratizing elements.

"Competitions, if justly treated, ironically level the playing field rather than marginalize some. Rags2riches, for example, would not have the same international access without international contests. Furthermore, contests allow one to fully showcase the 'magic' that may remain unarticulated or even unrecognized without the dynamics of a competition."

Xavier won the social enterprise award. His performance also reminded everyone present at the event that entrepreneurship is about solving other people's problems and creating opportunities for them. Xavier's business continues to help many of the poorest in the Philippines create highly desirable fashion items and a better life as well.

The judges, many of whom are already successful entrepreneurs, find different kinds of rewards in the competitions. Shomit Ghose, a venture capitalist with Onset Ventures, noted that the competition provides an opportunity to "stimulate your thinking by seeing what new things people are trying to do." He also stressed the mentorship opportunities, a motivation which was articulated by other judges as well. "Throughout my educational and professional career, I have been fortunate to have many a busy professional take time out of their schedule to participate in programs or provide mentoring from which I benefited," said Cecily O'Regan, an attorney with of Wilson Sonsini Goodrich and Rosati. "I participate in the pitch competition because it affords me the opportunity to have that same impact on others."

Focusing on the eclectic and international nature of the businesses and idea presented, Tom Lounibos, the CEO of SOASTA, explained, "Great ideas are not limited to the confines of geography or academic status. They emerge from all aspects of societies around the world. Business plan competitions give me a window into a world of creative thinkers, and that view has often changed my own perspective." And, Stephen J. Sullivan, MD, Managing Director with Skyline Ventures, concurred, noting that "the projects tend to be from around the world and the eclectic nature always surprises and fascinates."

Having organized contests for nine years now, I am equally fascinated by the many ambitious new business proposals I see each year. I am also inspired by the courage and enthusiasm of the many student entrepreneurs I meet.

Business plan competitions can be a rigorous and fun way for graduate students to test their innovative ideas before venture capitalists and entrepreneurial executives. While these competitions are frequently criticized -- often rightly so -- for creating unrealistic scenarios, the contests, if managed properly, may serve multiple purposes -- supporting entrepreneurial learning for the contestants and the audience, providing a level playing field of access and participation, and inspiring new generations of entrepreneurs as well as seasoned executives and investors.

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