APRIL 22, 2003

VENTURE CAPITAL
By Bradley T. Zimmer


The Value of Business-Plan Competitions
[Page 2 of 2]


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At Duke, half of the successful enterprises launched out of the Start-Up Challenge were ones that did not progress to the final rounds. Those management teams have consistently attributed their success to the formalization they went through in developing their business plan and presentations, as well as the critical feedback provided by the high level executives and private equity investors who serve as judges. For all who instead opted to join established companies, the skills they hone in business analysis, resource allocation and relationship building will make them more immediate and valuable employees for years to come.


Unlike a traditional business classes, university sponsored business-plan competitions award over $1 million each year in seed capital to winning start-ups -- an incentive just slightly higher than an A from the professor. Universities provide these awards in recognition that the competitions provide strategic benefits ranging from accelerated technology transfer to encouraging participation in the competitions. Perhaps most importantly, they give those startups deemed most worthy a real chance for success, letting the management teams chase their dreams.

TINY ACORNS, MIGHTY OAKS.  Hundreds of companies have been created through business-plan competitions, with thousands of jobs generated as a result. The most famous of these is digital content streamer Akamai (AKAM ), NASDAQ listed with almost $150 million in annual revenue.

For every Akamai, there are dozens more you probably haven't heard of. SunDance Genetics, a 2002 competition winner recently lauded in national magazines as a high-potential startup, is commercializing ten years of hybrid breeding research from Duke University. It's not genetic engineering, but rather a 21st century take on Gregor Mendel's experiments with peas. SunDance took their seed-capital award and put it towards demonstrating proof-of-concept, and, through testing, discovered their techniques could be commercialized, doubling agricultural crop yields in environments of limited water and fertilizer.

SunDance is not looking for venture funding, and most likely will not be trading on the public exchanges anytime soon. Rather, it is pursuing a strategy of partnering with established companies to fund and distribute their products.

Does this mean the business plan competition has failed, or that SunDance's management team of recent college graduates is less worthy for not having pursued the VCs? Just ask the millions in impoverished nations, for whom SunDance is working to produce heartier crops in conjunction with international aid organizations. The startup is able to donate its services in that capacity due to commercial success in the US agricultural industry -- all of which is possible because a few college students and researchers joined together to try their hand at a business-plan competition.

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Zimmer is co-chair of Duke University's Duke Start-Up Challenge.
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