Top 20 Schools Handing Out $1.6 Million A Year In Business Plan Contests

This year’s winners in the Rice University competition

The Rice competition, the world’s richest and largest business plan contest, attracted 42 teams across the globe to pitch their new tech business plans. Most contests are local affairs, such as the Harvard Business School events, which require a current MBA or alum, to compete. Harvard has three separate contests: two for current MBA students, one in new ventures and one in social enterprise, and a third for alumni. Harvard’s top prize is worth $50,000, half of it in cash and the other half in $25,000 in cash and $25,000 in in-kind services. Only three years ago, the top prize was $20,000, with half of that in cash.

Mostly, though, these contests provide learning and guidance. The prize money thrown at winners tends to be the icing on the cake rather than actual seed funding. “It would be great to give someone the equivalent of a seed round of prize money but it’s unrealistic for us,” says Michael Roberts, executive director of Harvard Business School’s Arthur Rock Center for Entrepreneurship. “We want it to be about the experience and the learning rather than the lottery ticket. People have the opportunity to present to really phenomenal people and they get great feedback.”

‘NOT A BUSINESS PLAN CONTEST, BUT A BUSINESS IDEA CONTEST’

While Harvard labels its competition a “business plan contest,” it’s less about business plans and more about real businesses. “It’s not a business plan contest,” adds Roberts. “It’s a business idea contest. In many cases, particularly in the consumer web space where it is so inexpensive to get into business, you see the students embrace many of the lean startup ideas they’re taught. They just don’t sit and write a plan. They think it through, talk to customers, develop a product, and then iterate.”

The prizes dangled in front of competing students is hardly easy money. Most contests consume many grueling months of competition on top of fairly demanding academic schedules. NYU’s Entrepreneurs Challenge is an eight-month ordeal in which would-be entrepreneurs test their ventures ideas, prepare financial statements and plans, pitch investors, and get coaching and feedback from entrepreneurs, investors and faculty.

The results of these contests can be impressive. In the past 12 years, NYU’s Stern School has awarded some $675,000 in cash and pro bono services to 31 startups. MIT claims that its competitions over the years have facilitated the birth of more than 160 companies with aggregate exit values of $2.5 billion and a combined market cap of over $15 billion. These companies have generated over 4,600 jobs and received $1.3 billion dollars in venture capital funding. The Harvard Business School contests have spawned hundreds of business plans and many successful enterprises including Finale, a Boston-area restaurant chain serving desserts and beverages, and Rent the Runway, which provides access to designer clothing at deep discounts.

For many contestants, the best ideas are often multi-disciplinary. The winning Vaxess team at Harvard, for example, includes two MBA candidates, but also students from the university’s Kennedy School, Law School and Faculty of Arts & Sciences, along with two students from nearby MIT. The idea for their business was hatched in a HBS elective class called “Commercializing Science” in which only a third of the students are MBA candidates.

In September of last year, the original four members of the team met each other in class for the first time. It was the Kennedy School student, Livio Valenti, who brought the idea to them. Before coming to Harvard, he had worked for the United Nations in Cambodia and was trying to find export markets for Cambodian silk. He came across two professors at Tufts University—David Kaplan and Fiorenzo Omenetto—who had been researching a wide range of uses for silk. That’s how he discovered the technology that could be used for transporting vaccines more cheaply without refrigeration. “At the end of the class we realized we had stumbled onto something special,” says Schrader.

While the competition was grueling, the original team felt it had a significant advantage over other teams because it had developed most of its business plan in the elective course that concluded with a pitch. “So we had a head start on the process,” adds Schrader. “When we started thinking about the business plan competition in January, we had already put in five months of work.”

While assembling the team, the original members felt that lacked some critical skills, particularly work experience in pharmaceuticals. With team member Patrick Ho from Harvard Law School, they had the legal side covered. Schrader brought business know-how, having worked in research-and-development through manufacturing in the auto business. Valenti brought the idea and the knowledge of global markets. And Kosuda had the chemistry covered.

So Schrader drafted another HBS second-year student, Anura Patil, who had worked for Johnson & Johnson. And then the team also contacted MIT’s Healthcare Club and put up a posting on its message board for additional members. It found Matthew Olsofsky, who had spent eight years at Baxter setting up manufacturing lines and getting FDA approval, and Isa Watson, who had worked for Pfizer bringing product to market.

If anything, the contests often encourage MBAs who might otherwise have gone into such traditional fields as consulting and financial services to do their own thing. Last year, some 65 MBA students at Harvard launched businesses by graduation. This year, thinks Roberts, it could be as many as 75 and the following year it could very well be higher because of the new mandatory requirement in the MBA curriculum for teams of six first-year students to create startups. “It’s a pretty big number of businesses and it’s exciting for us to see them create their own businesses this early in their careers. And for those that don’t work, students will get great experience. In this country, failure is not fatal and in Silicon Valley it may be a badge of honor.”

THE CONTESTS STARTED AT THE UNIVERSITY OF TEXAS IN 1984 WITH MOOT CORP

The competitions have their origins at the University of Texas where a pair of MBA students, Steven A. Mailman and Barbara Oppenheimer, in the early 1980s imagined a contest that would be as challenging as “moot court” in law school. In 1984, the inaugural “Moot Corp Competition” was launched at UT’s business school. Teams began to conceive an idea for a new business, develop the idea in a written business plan, and present it to a panel of entrepreneurs, venture capitalists, accountants and lawyers.

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