Who are the Real Winners in Business Plan Competition?

Contributed by BL

Whenever I chat with fellow business plan competition organizers from other parts of the world, the success of the teams after our business plan competitions is one of our favourite topics. After all, most organizers put forth the view that the success of the team is whether they translate themselves into better businesses. It is an essential pre-requisite for business plan organizers to consolidate a list of the teams and maintain relationships with these teams after the competition. Usually, the team involved in this aspect of a business plan competition is called the alumni team.

By comparing a couple of anecdotes over a pint of beer in the bar among ourselves, we came to a shocking revelation that the winner of our business plan competition rarely made it into becoming a heavy hitter. Over the discussion, we began to search through our list of past teams in the back of our mind. We came to a shocking revelation that it is usually not the winners but runner-ups, or entries which did not made into semi-finals tend to do better. The criterion which we adopt, is whether the team has turned itself into a business. At the same time, we also look into how much funds it has raised and whether the company formed by the team has started to surpass the valley of death (i.e. the turnover point when the company start earning revenues).

We all came up with two examples of non-winners of the competition becoming the heavy hitters. One of the top companies which emerged out of MIT-$50K, is Akamai which specializes in internet content delivery. It was a semi-finalist in the competition and it was listed in the NASDAQ and has a market capitalization of US$3.6B. We contrast this with one of the winners of the competition, Webline, which was only acquired by CISCO for US$325M. In the CU Entrepreneurs £50K competition, one of the runners up, Novexin has successfully raised £600K and is currently ready to jumpstart their product into the industries, comparing to the winner in the same year, which has not raised enough money to start a company.

I will give two reasons why this is the case. First and foremost, it is the criteria which the team and the business is judged. The team has to present the business plan in a very short time frame without thinking through most of the issues. They usually end up writing a quick businss plan and doing a presentation about the business plan to the judging panel. That is very different from the real world where the entrepreneurs have to pitch their ideas continuously to different investors. They will go through the whole process of pitching and fundraising many times before they can start their business. In such a short timeframe restricted by the business plan competition, there exists the possibility that the team might have a brilliant business idea but lack the correct pitch that will convince the assessors to crown them the winners. To put it simply, everyone has their bad days. So, there exists a chance that the team might encounter situations which are not in their favour. In a competition unlike the real world, you only have one chance to convince the judges who are assessing you and this brings us to the next point.

Judging is one of the most difficult aspects in any business plan competition. The judges consist of a group of successful entrepreneurs, venture capitalists and professionals. They are usually experts in their area of focus. Sometimes, it is difficult for them to judge an idea if they have no idea how the field is like. If the whole panel of judges have no expertise in the industry which the entrepreneurs are talking about, the team will have a hard time in convincing them that the idea is worthwhile. The organizers will hope that the judges should be open-minded. However, it is impossible and unrealistic to expect that they will always be objective. If it is a problem of a biotech entrepreneur judging a nanotech team, the solution is just getting a biotech professional to remedy the situation. However, the problem is more complicated. The whole biotech industry is so diverse that you can still get a biotech entrepreneur specializing in healthcare and medical devices, and not able to assess a team specializing in genomic technologies. The point simply is that any team who engages in a business plan competition are always at the mercy of the judges.

It is interesting that we are observing that the real winners are not the winners in the competition. In the context of Singapore, at least in my generation, most people are not very tolerant of failure. I grew up with my elders telling me to be a lawyer or engineer and not go and be an entrepreneur. If this mentality is still prevailing today, the worry is that the entrepreneurs will equate winning a competition to the be-all and end-all situation. I will hope that being a successful entrepreneur is just like winning a scholarship with good academic results, but in reality, it is not the case.

The moral of the story is that it is a good experience to take part in a business plan competition. If you are seriously a beginner, the whole process will help to speed your learning curve on how to develop a business plan for your idea. Well, you can start the process by taking part in local competitions, for example, http://www.startup.org.sg. However, if you want to make the company happen, the success of winning a competition will not help because it is the team which drives the process. There is still a lot to learn, for example, you have to go to talk to suppliers, find a management team and check out how to get the supply chain working. These skills are such that you cannot read from a textbook. Sometimes, to be an entrepreneur, it is not just about writing a business plan but you have to go out and get your hands dirty.

In retrospect, who are the real winners in business plan competitions? The real winners are teams which possess two important traits: passion and perseverance. They have the passion and perseverance to pursue their idea and not letting a business plan competition deter them from doing so. It is an essential trait for an entrepreneur to accept failure and start over again. If you sincerely believe in the idea and the implementation, you should continue to try. Of course, you have to go back to the drawing board, if the investors think that your method might not work. The real difference between a business plan competition and the real world, is that your business plan changes all the time.

So, go out and make a difference. That’s how you can be a real winner.

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