How to Win a Business-Plan Competition

For serial entrepreneur Mike Cassidy, MIT's Entrepreneurship Competition wasn't just a contest. It was a catalyst for a career. In 1998, one of the two years he won the competition, he won with a plan to provide Web portals with smarter search engine technology called Direct Hit Technologies.

"In the beginning, I was trying to get these other search engines to work with me and nobody would return my calls," he says. "But when we won the MIT competition, I would send that in my intro letter." As a result, he landed a meeting with the search engine company HotBot. That led to deals with AOL, and Microsoft and Lycos. In 2000, Ask Jeeves bought Direct Hit for $532.5 million. Today, Cassidy is director of product management at Google.

Business-plan competitions have expanded into elevator pitch battles and industry-specific contests. The scale has grown, too. When a UCLA team won the 2005 Rice University Business-Plan Competition, it received a $100,000 investment prize to launch the tech company Auditude. But several venture capitalists at the competition were so impressed that they offered to invest $1.1 million.

With that kind of money and influence at stake, here is insider advice from organizers, judges, and competitors:

Winning a Business-Plan Competition: Pick a Strong Team

Megan Mitchell, senior associate director of entrepreneurial programs at the University of Pennsylvania's Wharton School, helps students manage the Wharton Business-Plan Competition. "Make sure you look outside your closest friends for your teammates," she says. Cross disciplines. "If you're a med student, find a business student who might be interested in helping you commercialize your idea."

Internal friction and bickering can be devastating. "I wish someone had really told me, 'Forget everything else and just make sure you get the most amazing people on the team,'" Cassidy says. He recommends looking for smart, hard workers who are team players. "Find some way to have a stressful situation where you can see how your teammates are going to react." Those who can rebound easily make ideal teammates—and future colleagues.

Winning a Business-Plan Competition: Look for Turmoil

Cassidy suggests looking for a business opportunity in an area where there's some sort of turmoil, confusion, or rapid growth. "In those cases, it's a much better opportunity for a new entrant to make some headway," he says. In 2006, when the online gaming was just taking off, Cassidy sold his online gaming startup Xfire to MTV Networks for $102 million. "Also, I really encourage people to pick businesses where you can do a lot with a very small team," he adds.

That said, skip the secrecy. The more transparent you can be, the better. Mitchell says she's seen many students tempted to hold ideas close to the vest and ask everyone around them to sign non-disclosure agreements. "There are some cases where that might be necessary with very technological plays, but the reality is, particularly if you're in school, you're surrounded by people who want to help," she says. Talk to enough people and they know it's your idea.

The Rice University competition is one of the largest in the world. Brad Burke is managing director for the Rice Alliance for Technology and Entrepreneurship, which organizes and hosts the competition. Investors are looking for teams with sustainable advantages, he says. "Hopefully if they have a technology, they have a patent on the technology."

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Winning a Business-Plan Competition: Use Your Resources to Plan Well

Luke Behnke is a second year MBA student at the MIT Sloan School of Management, and one of the directors of the school's $100K Entrepreneurship Competition. Last year he was on a team that didn't get selected as a finalist, a stage where competitors get one-on-one support. "I wish I would have done more in advance to get to that point," he says.

Burke says that while young entrepreneurs can fill their knowledge gap by creating an advisory board. "An advisory board of 10 people, each with 25 years experience, and they are in leadership positions in their companies—that creates huge credibility," he says. If your team is creating a product for the airline industry, try to get executives from United and Boeing on the board, he added. Those trusted advisors could easily become customers, or investors.

And be sure to acknowledge your weaknesses. Teams are naturally going to be missing a key person—a marketer, an engineer. Burke says that's to be expected. However, the team does need to tell the judges something like, "As soon as we get funding, we'll be looking for a chief technology officer."

Cassidy says that once, when the judges asked his team questions they couldn't answer, the team took advantage of a break to find out. "We ran home, we did some research," he says. "We ran in at the end of the day and said, ‘Here's a typed up list of answers to the questions you asked us three hours ago.' They were just blown away."

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Winning a Business-Plan Competition: Focus on the Customer

One of Mike Cassidy's teammates for the MIT prize in 1991 was Krisztina "Z" Holly, who has since become vice provost for innovation at USC and executive director of the USC Stevens Institute for Innovation. Having been on both sides of a contest, she recommends getting in a customer-oriented mindset.

"It's not a solution looking for a problem," she says. "Understand the mindset of the consumer, understand what it is they have to do." Then use those insights to develop an idea.