With more and more business plan competitions being organized, many see them as a fashion trend serving no genuine purpose. Maybe it’s time to give business plan competitions their due
It is surprising to hear people say that not many business plan contest winners make it big or even get large VC funding. You could be of the opinion that this is largely a PR and brand-building exercise for the institutions and they don’t really mean business. But then isn’t it true that Travelguru was a Harvard Business School business plan product?
A quick look at the recent winners of business plan contests (BPCs) conducted in undergraduate schools in India may suggest that winning BPCs these days has become more about great presentations and executive summaries and less about crazy, creative, innovative and mind-blowing ideas. And this implies that business plans are written simply for winning big prize money and many winners could be cited acknowledging that they have no ambitions to take their ideas forward.
And what about the contest itself? Does it really help winners get good funding, mentoring, guidance, support and other resources? The question about right judging might be more individual in nature, but the more important issue that needs to be addressed is whether the winners are just awarded money or they are nurtured and handheld till they startup.
The international scene
Most of the prominent business plan competitions provide access to the whole entrepreneurial ecosystem, like mentoring, incubation, and access to funding. Whether it is the Stanford Business Plan competition—E-Challenge, the UC Berkeley Business Plan Competition, Conquest—the business plan competition of BITS Pilani or Eureka by IIT Mumbai, it is the prospect of getting access to mentors, VCs or incubation that drives people to participate. As most ideas are born during picnics or cafeteria meetings and the team comprises of dorm-mates, not many have a clear perspective and a right picture of the startup scenario. Therefore creating and building an entrepreneur-conducive ecosystem including incubation on educational campuses becomes a necessary prerequisite.
E-Challenge participants at Stanford learn about venture formation and explore their entrepreneurial dreams and vision in a conducive and supportive environment. It extends wide ranging support by way of resources such as general information for entrepreneurs, technical information, legal information, funding/venture capital, business plans, and national and community support organizations, so as to enable participants to translate their ideas into reality. The UC Berkeley Business Plan Competition nurtures entrepreneurial talent across the UC Berkeley community. Wide-ranging resources are provided to prospective teams that participate in the campus, so as to improve their chances of success. The Lester Center, the sponsor of the UC Berkeley Business Plan Competition, has created an eco-system that facilitates in nurturing the budding entrepreneurs by extending a variety of resources and a support system.
A study conducted by Critical I Ltd for BBSRC, which holds a business plan contest especially for biosciences related ideas, reveals an encouraging level of commercialization activity by past participants. Sixty-five percent of respondents have already actively commercialized their research outputs and a further 15% are still actively attempting to do so. The competition significantly increased the attractiveness of commercial exploitation for 88% of respondents and equipped all but 5% of them to better identify research outputs with commercial potential. This study confirms the positive impact that this business plan competition initiative is having on enhancing the commercial knowledge and understanding of participants and encouraging and stimulating them to commercialize their research outputs.
There is a twist in the tale though. The report also says that two-thirds of those who have commercialized their research feel that it was likely that they would have done so, regardless of the impetus provided by the BPC. However, it is clear from qualitative research conducted that all participants benefited significantly from the BPC, not least in motivating them to devote time and energy in making headway into their idea. One suspects that a number of respondents may, ex post facto, have over-estimated their own determination and under-estimated the impact of the BPC in that regard.
What’s due
This brings us to an interesting point. Is it that BPCs aren’t given enough credit and publicity that they eventually end up looking as unimportant stages in a startup’s life? A look at the winners of Conquest, the business plan competition at BITS Pilani, proves that BPCs might just be angels in disguise. The winners and runners-up of Conquest 2005: Mobile Medics and Habits have successfully launched their ventures and are moving ahead to respond to the challenges ahead. If it hadn’t been for the furore created by the first edition of Conquest four years back, these ideas might just have remained ideas that you discuss with friends and not have seen the light as startups. Two-thirds of the winning teams of Conquest during the last three years have successfully launched their ventures. This gives a greater confidence in the role of BPCs as a major component in the promotion of entrepreneurship.
The presence of hype around an event can be annoying at times, but it definitely gets people talking about it, often in awe. However, in undergraduate schools of technical nature, BPCs are often a trying experience to the purists around, those who can’t come to accept the fact that business and technology can in fact go hand-in-hand. In reality we are trying to get one step closer to building an industrially self-sustained India.
BPCs might sound sophisticated, hyped-up events but the bottom line is that this new genre of business challenge provokes people to think and act differently. It is like creating the product before the market exists. If there is a big prize luring students without any loss on their side, there might easily be a new creed of students dreaming of being the next Steve Jobs or Narayan Murthy! It might be that participants might just try out their hand at writing business plans for the sake of winning, but the unexpected success coupled with a favorable ecosystem on campuses might just make them give their idea a second thought.
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written by Arun Jha, January 17, 2009
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