Most venture contests deal with three elements: the business plan, the pitch presentation, and the question and answer session. Where does the plan itself stand, in the mix? What I’ve gathered from 13 years of judging graduate level business venture contests is the following:
- The best business plan isn’t always the best venture.
- The best venture usually has one of the better business plans.
- The best venture almost never has a bad business plan.
- There are relatively weak ventures with relatively strong business plans.
I’m in Houston the rest of this week for the Rice University Business Plan Contest. The finals are tomorrow. Winners will be announced tomorrow night. And there, amidst about $800K in cash and in-kind prizes, will be the $2,500 Palo Alto Software outstanding business plan award. With me announcing the winner.
Leading up to that, two days ago, 11 of us met in a Palo Alto Software conference room. It was the culmination of a three-week process that required evaluating the 42 business plans competing today at Rice. The award is for the plan, not the venture. We’ve seen the plans only, not the people, not the presentations, not the questions and answers. We divided them up so that everybody read at least 10 of the plans, most of the people 12, and a couple of people read as many as 16. The participants included me, our CEO, COO, VPs of product development and customer experience, web producer, and marketing managers. To help balance the output, every plan was read by at least four people.
But we had four winners, not just one. There were four plans which were that good.
Rice University and the contest should be very proud of these plans. The teams that submitted them should be very proud of them. After all of the scrutiny, we ended up with four plans that we’d be very proud to award as the best plan.
Several of us had different views on the relative weight of the plan as document vs. the plan as description of the venture. I know that’s a hard concept to swallow, but think of it like this: can a business plan that has every major factor locked down, but has some occasional spelling and grammar problems, be a winner? Is that better than a plan that is beautifully written, easy to read, has great illustrations, looks sensational, but has maybe one hole in the business details?
And how about this one: is a high-risk, high-return plan, taking tens of millions of dollars to yield hundreds of millions 10 years from now, but only if it runs a very narrow gauntlet of challenges, better than a plan that has only medium risk, a product already selling, happy customers, but projects getting to $8 million in five years, with a valuation of $15 million?
Tomorrow I have to announce a single winner, and, happily, we did finally come to a decision on which one to name. But that one is one of four plans that deserved to win.