Most contests start with 80 to 120 teams, each of which submits an executive summary of its plan. About half will be invited to the next round -- submitting the full plan -- and the judges then whittle that group down to 10 to 25 finalists. Along the way, students get valuable advice from successful entrepreneurs, a chance to hone presentation skills, and mentoring from professors and venture capitalists.
Just ask Matt Ferris, president of KidSmart Corp., about the value of the contests. His startup raised more than $100,000 in winnings from several venture competitions. They include University of Oregon's New Venture Championship, where his team took second place and $10,000, and Moot Corp. Competition, in Austin, Tex., where the team won first prize and a $100,000 equity investment last spring.SMOKIN'
Next month, KidSmart, which develops smoke detectors for children's quarters that give escape instructions in a parent's own voice, will take delivery on the first shipment of its product. The company, which until a few weeks ago operated out of Chief Financial Officer Bruce Black's basement in Roswell, Ga., is also about to close a further round of funding of about $1 million.
The KidSmart founders have benefited from the connections they made through the venture competitions. In their first contest, held at Wake Forest University in Winston-Salem, N.C., the KidSmart team met a partner in a venture-capital firm who helped them create a network of experts that Ferris and Black still draw on today. The VC partner also offered useful advice onimproving the team's plan.
Indeed, feedback from experts might be the best reason to enter. "There are few other avenues I can think of where you are going to get such candid and sincerely helpful feedback from a wide array of professionals who know what they are talking about," says Chad Sorenson, a University of Wisconsin at Madison MBA grad whose company won about $45,000 in several competitions to develop a device to help farmers monitor the machinery that applies fertilizer. At Moot Corp., finalists are treated to an hourlong, often blunt feedback session: "They didn't sugarcoat it," says Ferris.
It's a good idea to find out who the judges are at a competition before you enter. A group of West Coast tech-oriented judges might not be the best panel to hear a pitch for a fertilizer venture.
Also, don't necessarily go to the contest that offers the biggest stakes. A huge cash prize might not be so tempting if the sponsor ends up retaining a big chunk of equity in your company. The KidSmart team turned down a second-place $750,000 equity investment prize at Carrot Capital because "the terms were onerous" and the equity share the venture firm wanted seemed like too much. "Teams need to understand the reality of the payouts," says Randy Swangard, director of University of Oregon's Entrepreneurship program. "Some [venture firms and schools] are coming along for a piece of the action."ARDUOUS TOIL
Expect to spend lots of time preparing for the contest -- including market research, cost analysis, and writing the plan. Former participants say a team of four will spend upwards of 2,000 hours combined in preparation, plus up to 100 hours refining the presentation before each competition. About 85% of that will be spent outside class. MBA courses angled toward competitions can be very helpful, says Caroline Palmer, a 2003 University of Oregon grad who participated in four competitions and her school's MBA venture course. "The course challenged me to integrate everything that I learned in my classes and apply it to real business." The B-schools, tapping corporate and alumni contributions, will usually pay the travel and related expenses for attending the competitions.
If you attend a school that has its own business incubator -- a program designed to help businesses get off the ground, offering office space and other resources -- you may get additional seed money to fund your research and early startup phase before you head off to competitions. Columbia Business School, for example, offers such money through its Lang Fund to student teams that have completed a series of entrepreneurship courses. At Columbia, the effort is considered educational. "We roll up our sleeves and spend one-on-one time helping a student start a business. It changes the entire character of our entrepreneurship program," says the program executive director, Murray Low.
Before you make the considerable investment that's required in time and energy, make sure you know which competitions are the best fit for you and your business plan. (One good starting place is www.mootcorp.org, which also has links to the sites of other contests. This year's Moot Corp. competition will be held on May 5-8 on the campus of the University of Texas at Austin.) The payoff could be big: plenty of experience, cash in your pocket, and a head start in launching a company of your own. By Jennifer Merritt