University Business Plan competitions – where teams of students (and often staff and alumni) can enter their business idea for funding and other support – have been around for decades, with successful competitions yielding benefits for both students and their universities in a number of ways.
What is a University Business Plan competition?
The idea of the University Business Plan competition is thought to have originated at the University of Texas in 1984 by a group of MBA students, and for many years MBA students with engineering backgrounds were often the winners of these type of competitions. However, they are now an integral part of the university support system for student entrepreneurs worldwide, along with incubators and accelerator programmes which can help a diverse range of student teams take their idea forward in a supportive environment. They don’t take any equity stake in any business created, so you do not dilute ownership of the company – which is important if applying for further funding from equity investors at a later date.
What funding is on offer?
The funding on offer can be considerable, for example MIT’s “100k Entrepreneurship Competition”, running since 1989, has a top prize of $100k, but with a pot of nearly $1m over the competitions’ three stages of “pitch, accelerate, launch”. A look at the list compiled in 2020 by The Times of Entrepreneurship shows the big prizes on offer to potential student entrepreneurs in the US, but competitions are common throughout the world, and most UK universities have a competition as part of their entrepreneurship offering to students.
As well as the immediate funding itself, winning a Business Plan competition can encourage others to invest –other potential funders might also get involved now they have seen your idea validated by winning a competition. Even if your idea is one that may require large amounts of funding, the winnings can act as a seed fund allowing even relatively large projects to take a step forward and achieve milestones, de-risking the project for further investment – for example filing some IP, conducting a wider marketing survey, or in some cases making a prototype. This is especially useful if you are using a lean start-up method where you try to use as little money as possible and validate your idea after every iterative improvement.
What in-kind support is available?
Whilst there are some sizable prizes in terms of funding around, the in-kind support can be just as valuable. In-kind support encompasses a range of benefits – Incubator space where you can have access to shared facilities and lab space, access to an accelerator programme, the services of an IP lawyer and access to experienced mentors. The publicity a win generates could also make headlines – which can attract potential collaborators, funders or customers.
There are opportunities for alumni to get involved. Often, recent alumni are allowed to enter the competitions themselves, but of those who are now already successful in business, many are wanting to be supportive to help to the next generation and can provide valuable support by mentoring the students. It is also a potential opportunity for alumni to donate financially by sponsoring the competition.
For the university, there is the benefit of making their graduates more employable and enjoy the good publicity generated from success stories, potentially attracting more students. For some business ideas, there may be the chance for students and staff to take forward IP developed at the university which might otherwise remain on the shelf. It could help contribute to the UN Sustainable Development Goals in terms of supporting ideas which can impact environment and social outcomes amongst others, and help the university rise in the rankings accordingly.
What is the legacy?
These competitions are certainly creating a legacy of success – at my institution, the University of Manchester the Venture Further competition, founded in 2003, is divided into Social, Environmental, Technology, Services and Healthcare category. The original winner, Wai Lau still runs his company Cloud Enterprises. Siddharth Sethi, a winner in 2018 with Specscart opticians and glasses now has 3 stores with a turnover of £2m. Beenish Siddique’s company AEH Hydrogel, which reduces the need for fresh water in agriculture has raised £3.5m. One of our 2021 winners, Mohammad El Hajj has already raised £2.3m investment with his company Bright Biotech producing valuable proteins using plants. Social enterprises have also been successful with Christina Taylor, winner in 2013 with dance company Aim Sky High, named as one of the top ten female founders of colour to watch.
What else do I need to know?
As well as the usual advice for writing a business plan, I would suggest If your project is science based, don’t give away any details of your IP – focus on what the product does rather than how it does it – it is much more important to explain the benefits of the product or service and why is it better than existing competitors. Also, what would you do with the money – you should explain how it will advance the project, if you win, what difference will it make?
Students should be reminded that sometimes there are low numbers of entries, especially in niche areas, so any inferiority complex that student may have about entering due to the perceived high volume of other entries should be dispelled. Students also shouldn’t be too disheartened if they don’t win – judging can be subjective, and as we have seen on Dragons Den, and other contests, it does not preclude success in the future if you are not a winner in one particular competition. With this in mind it’s very important to give feedback from the judging process both good and bad to all the participants to allow the entrants to objectively address any issues. Prediction of success, for judges and investors alike, is difficult.
However, it’s not just all about taking your business idea forward – for those that do not end up taking their business forward there is a range of employer-friendly skills to be gained. Networking, especially with people outside your subject area is a valuable skill as is putting together a business case for a project and employers have also said they value pitching skills (especially to a non-specialist audience) – these are excellent for the CV. Also, while some academic research has shown that the competitions are not quite as realistic as starting your venture outside academia, other benefits have been found, including the ability to communicate ideas and that self-confidence is also boosted by taking part. Researchers agree that development of entrepreneurial competencies is key to creating entrepreneurial graduates, and learning by doing is usually the bast approach as recommended by, amongst others, the UK’s Quality Assurance Agency.
Once you have your application perfected, you can use it for entering other competitions. Some competitions are open to students worldwide, such as the competition at Rice University. There are also nationwide UK competitions that students can apply to such as Santander X competition which, established in 2011, offers a share of 150k prize money to the winners, who can then go through to an International Final for further funding. Sojo from Kings College London won in 2021 – a business making it easier for people get clothing altered and repaired extending its useful lifetime. Outside of academia, many big banks have start-up competitions, and Shell Livewire also offer a range of prizes and support for start-ups. The Entrepreneur Handbook has a useful list of competitions that could be entered.
Competitions have also evolved to encourage environment and social ventures reflecting students increasing interest in the area. Competitions have diversified to encourage ideas on a range of issues, such as the London Healthcare Challenge run by London Business School for improving healthcare outcomes (https://www.londonhealthtechchallenge.org/), whilst the Tata Varsity Pitch has categories for digital, creative, technical, health and social impact (https://nacue.com/events/tata-varsity-pitch-competition.html).
With the benefits it can bring, both financial and non-financial, any aspiring student entrepreneur should be putting the data of the business competition in their diary – and the university should be encouraging as many as possible enter.
Dr Robert A. Phillips is a Senior Lecturer in Entrepreneurship at Alliance Manchester Business School, University of Manchester.
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