Tag Archives: University of Texas

Q&A: Winning Business Plan for a Competition

Business Plan Contest, Venture Contests, , , ,

How do you do a winning business plan for a business plan competition? I’m glad you asked. I’m a frequent judge of these competitions so it’s in my interest to help you improve your chances by developing a better business plan, pitch presentation, summary, and elevator speech.win the competition

So that you know, I’m answering this question with reference to the mainstream high-profile business plan competitions I’ve judged many times, including the University of Texas’ Global Venture Labs Investment Competition, the Rice Business Plan Competition, and the University of Oregon’s New Venture Competition. I’ve done these three at least 10 times each. I’m assuming they are typical – but I could be wrong.

Here’s how the process works, with regard to what you deliver and how decisions are made:

  1. You submit either a business plan or executive summary to a steering committee that selects a few dozen entrants from hundreds of submissions. These committees vary. Many still use the full plan, but trends favor just the summary. This step takes place behind the scenes, before the visible portion of the competition begins. The entries selected are called semi-finalists. They are invited to go to the competition, at the site, which usually involves a Thursday, Friday, and Saturday, most often in April or May.
  2. Semi-finalists are divided into groups of four to six. Semi-final judges, mostly angel investors, venture capitalists, and executives from sponsor companies, read and evaluate the full business plans before the competition starts.
  3. An elevator speech round happens on the Thursday, in the evening. The teams do a 60-second elevator speech for prizes and awards. Winning that competition doesn’t formally help win the main prize, but informally, it affects the judges who see it. About half the judges will attend that first evening.
  4. The semi-final round takes place on Friday. Teams do pitch presentations and answer questions from the judges assigned to their group, who have read their business plans. Judges choose a finalist based not on the quality of business as a potential investment. The plan matters of course, and the pitch matters as well, but the choice is ultimately about the business. Judges try to make decisions based on investment criteria, including growth potential, defensibility, scalability, and experience of the management team.
  5. Finalists go through the same gauntlet on Saturday. Finals judges read the plans, listen to pitches, and ask questions. They choose the winner based on the same criteria they use to choose investments.

In all of these competitions, the judges are told to choose the best plan for outside investors, not the best-written or most attractively formatted business plan. So, a mediocre business plan for a great business will always beat a great business plan for a mediocre business. What you want from your business plan is to present your business well in a way that makes it easy for judges to see what you have. Your business plan alone isn’t enough to determine your fate in these competitions, but it does provide the first impression and the detailed background. In fact, all three of the competitions I mentioned above have special prizes for the best business plan, but those awards pale in comparison to the main prizes.

Therefore, the best way to help your chances with your business plan is to make sure the judges see the critical elements that make a business attractive to investors: potential growth and scalability, proprietary technology or some other kind of barriers to entry, and an experienced management team.

Here are some related tips that might also help:

  1. Make sure you cover the information investors want. Tell a convincing story about the problem you solve and the solution you offer, in a way that will interest the investors and let them believe your market story. Show whatever traction you have, and as much startup experience in the management team as you can. Show how your business will defend itself (proprietary technology, trade secrets, whatever secret sauce you have) from competitors entering the market. Show how you can scale up for high growth. Show that you understand how exits might work in 3-5 years.
  2. Keep it brief. Be concise. Don’t show off your knowledge, push your main points forward. Bullet points are appreciated.
  3. Show your numbers and your key assumptions. Numbers without assumptions and underlying story are useless. Forget present value and IRR games that depend on future assumptions. Show unit economics and build forecasts bottom up, from assumptions, not ever as some small percentage of a big market.
  4. Use illustrations that simplify and explain. Have the detailed numbers to back them up, of course, but use bar charts and line charts and pie charts to help readers get the idea quickly.
  5. Check your numbers against real world benchmarks. Investors will react negatively, not positively, to unrealistic profitability projections.
  6. Maintain alignment between the key points you emphasize in the business plan, the pitch presentation, and the elevator speech. Ideally your business plan is like the screenplay for the pitch presentation and the elevator speech.
  7. Don’t be afraid to revise numbers constantly, and don’t apologize if the numbers you show today are different from what you showed yesterday. Plans are supposed to evolve constantly.

(Image: shutterstock.com)

Moot Corp Lesson: Even the Best Plans Change

Bootstrapping, Venture Contests, , , ,

My favorite moment in a arecent business plan contest: The entrepreneurs put up a projected income slide. One of the judges commented that what was on the slide was different from what he saw in the business plan. The entrepreneur immediately answered “no, of course not, that was an earlier iteration.”

Moot CorpThis was during the finals of the University of Texas’ Moot Corp business plan competition last Saturday. I judged the first round Friday, watched the finals Saturday, and ended up in awe at the level of competence and competition.

That favorite moment wasn’t part of the flawless finals session of the winner. It was in the finals, though, as a Carnegie Mellon team presented a technology to monitor glucose levels using contact lenses. What I liked about that quick answer was the underlying assumption that plans change. New information matters. There was no reason to keep the numbers from last week after new information this week suggested they should change.

If the projections today don’t match those from two weeks ago, no apology is necessary.

The winner, BiologicsMD, also won the Rice University competition a few weeks ago. If you get a chance to see the video of their performance, both with their pitch and their business and their answers to judges’ question, take it. That’s the best I’ve ever seen. The company, one of two finalists from the University of Arkansas, has developed a new medicine to treat osteoporosis. It included a PhD researcher, an MD researcher, and two business executives. The panel of judges, three of the four of them with backgrounds related to medical technology and FDA approval and such, asked an amazing array of detailed industry-specific questions. And they were presented with an even more amazing array of straight-on answers. That was as good as it gets.

I’ve noted this trend in previous posts here, and it happened again at Moot Corp: more companies with more viable plans, relatively fewer Web applications and software companies, and more companies out to change the world with medical solutions, medical technology, clean energy, and so on. The four finalists this year included, besides the treatment for osteoporosis and the glucose level monitor, a team intending to cut costs of solar panel manufacturing, and a team with a new way to inject medicines.

Other interesting notes: the semi-finals round of 10 teams included teams from five different nations; the University of Arkansas had two teams among the four finalists; and the Moot Corp, the first and best known of all of these MBA-level business plan competitions, is going to change its name to Venture Labs Investment Competition next year. Too bad: I like the name it’s carried since 1984. But that’s just me. And, on the other hand, plans change.

Business Plan Contests Grow Up and Mean Business

Business Education, Business Plan Contest, Business Plan Marathon, Venture Contests, , , , , , ,

It’s time to note a major change. Just a few years ago business plan contests were an academic oddity, a dress-up exercise at a few business grad schools. Suddenly, or so it seems, they’re pretty much for real. Some very powerful new businesses are appearing at business plan contests, winning significant money, attracting investors, getting funded, and turning into real businesses.

Rice ContestFor milestones, try this: last weekend Rice University hosted the first business plan contest to offer $1 million in total prize money. This is a serious event now. If you’re at all curious about how strong some of these businesses are, read Lora Kolodny’s ‘I Want This Drug on the Market by the Time I Need It!’ on her You’re the Boss Blog at the NYTimes.com.

How important are these contests? How real? Well Lora wasn’t the only journalist at Rice last weekend. Fortune and CNN are covering that contest in detail. Expect to see some of these major contests in the Wall Street Journal.

Brad Burke, head of the Rice Alliance for Technology and Entrepreneurship, chief host and organizer of the Rice contest, likes to point out how many of the teams entered have gone on to be successful:

More than 97 past competitors have gone on to successfully launch their business, including 33 of the 42 teams from the 2009 competition. In total, past competitors have raised more than $220 million in funding.

Moot Corp, meanwhile, the first of these competitions, started in 1984, has trouble keeping up with all of its Moot Corp success stories. Moot Corp will be taking place in Austin again this year, in early May, gathering together the winners of several dozen other competitions.

And at the University of Oregon’s annual New Venture Competition, of which I’ve been a judge 12 times, all four of the teams in my semi-finals track looked like real companies with good probability of making it in the real world. That’s impressive. I’ve seen a lot of good companies in that one before, but never before have I done a track in which all four of the four groups seemed likely to be real viable companies in the real world.

10 Requests From Your Business Plan Reader

Angel investment, Business Plan Contest, Business Plan Marathon, Business Planning, , , , , ,

I’ve started my business plan marathon season again. Between now and the end of May, I’ll read several hundred business plans: some for my angel investment group (Willamette Angel Conference), and others for judging business plan contests at the Universities of Oregon, Texas, Rice, Princeton, and Notre Dame.

paperworkI’d like to use the famous T.S. Eliot line from The Wasteland: “April is the cruelest month.” The trouble is that I like reading business plans, so that wouldn’t fit. I posted about his last year around this time, and here I am again, reading plans.

What does seem appropriate, however, is my plea to business plan writers, wherever you are, if you’re going to produce a plan that I have to read:

  1. Convert it to PDF please. I hate those big honking bound documents. They weigh a ton. Most of my business plan judging involves planes, hotels, and airports.
  2. Give my aging eyes a break. Learn the definition of presbyopia and then reflect on the demographics of angel investors and business plan judges.
  3. Make it about the business, not the science. I want to see target markets, channels, sales, costs, exit strategies, defensibility, scalability, and things like that. Unless it’s software or Web stuff, where I’m more at ease, I’m not going to read or understand your science. I’ll look at your experience and degrees and I’ll take your early sales, testimonials, and such as validating your science.
  4. Summarize well. Make sure you hit the high points. Don’t ever let me finish a summary without knowing what you’re selling to what market, why they’ll buy it, what it does for them, how much money you think you need, how fast and to what sales level you can scale up, strengths, core competence, and a quick sense of your team.
  5. Tell me stories. Make me understand what problems you solve, for whom, and how they find you. Make that story credible. Give me some real examples, real situations, real people, and make it believable.
  6. Show me milestones: milestones you’ve achieved, and milestones you need to achieve.
  7. Don’t give me dumb profits. If you’re going to generate margins at twice the average industry levels, then you better have a convincing reason for why that’s possible. When I see huge profitability, it doesn’t make me think you’re going to be amazingly profitable; it makes me think you don’t know the business you’re in.
  8. Show me your patents if you have them but if you do, show me something about how defensible they are (if at all) and make sure your projections include legal expenses to defend them.
  9. Show me that you know something about cash flow: inventory management if you have products, receivables and collection days.
  10. Think of your reader. We don’t all have hundreds of plans to read, but whether it’s for angel investing or a business plan contest, we do all have a good number.

(Image: AVAVA/Shutterstock)

Do Business Plan Contest Winners Make It in the Real World?

Angel investment, Business Plan Marathon, Venture Contests, , , , , , , , , , ,

Craig from trackster.com asked me last week in a comment he added to my Willamette Angel Conference post:

I was wondering with all these business plan competitions that you judge, how many winners or even non winners have you seen turn into successful companies? Are there any examples that you could give?

Yes, a lot of these companies make it. It’s more like half than the one in 10 portion you’d think from the classic assumptions.

I’ve seen lots of these companies launch and become successful, in a much higher proportion than the classic assumption of one or two of every 10.

For example, take a look at this page from the Rice Business Alliance, which has run one of the best of these contests since 2002. The graph here shows the success rate for all of the 166 ventures entered in the Rice contest from the beginning. The trend is very clear. The Rice Alliance says that since 2001 (quoting their website):

  • 66 of our past Rice Business Plan Competition teams are successful business start-ups
  • 192 business teams from national and international schools have participated
  • More than $90 million in capital raised by Rice Business Plan Competition participant companies

Although they make the raw data quite as accessible as the Rice Alliance does, the University of Texas’ Moot Corp, the oldest and most respected of these contests, has to have a similar success rate. I say that because I’m involved with both and the plans and the people are excellent in both. And Moot Corp does post a very long page full of specific successes, with a lot of details. I saw all of the companies they have there from the 2007 and 2008 contests, and I’m not at all surprised that they’ve made it.

I particularly liked cQue, which recently landed a contract with the San Francisco Giants to revolutionize ticketing technology; and Evapt, an automated billing system for software as a service; and several dozen others. They are up and running, they are raising money, they are making it.

To be fair, these two competitions tend to be the best of the best. The entrants are carefully selected. Most of them have won local or regional contests. They are grad students and people in the real world. I’m also involved in some less ambitious business plan contests, like ones for undergrads, that don’t produce a lot of real companies.

And this year I’ve added angel investment, which is a different thing entirely. Like the major academic contests, it is about business plans, ventures, presentations, questions and answers, investors’ points of view, exit strategies, and so on. Unlike the academic contests, there are no MBA requirements, and no faculty advisors.

And specifically, the angel group I’m in, the one I posted on last Thursday morning: there were five finalists that presented to the group. All five of them are very real companies already, even thought they want and in some cases need angel investment of $125K. All five will be there a year from now. The one with the lowest need and least ambitious forecast, a software company called CenterSpace, won the investment. But the four others that didn’t win, led by my personal favorite, Zapproved, have good future prospects. That was also Zaps Technologies, Wicked Quick, and Floragenex. All of these are going to survive and grow.