Ask Jeffrey Tacca. In 1996 his business plan for an Internet consulting company won Georgia Tech's tournament in Atlanta. He promptly sweet-talked one of the judges, Mary Madden, into serving on the board of his company, AtlanticWeb. Madden, the cofounder of a legal-research outfit and a member of the Society of International Business Fellows (SIBF), an Atlanta-based networking group for business executives, has impressive connections. When she recommended AtlanticWeb for a $30,000 contract to build the SIBF's intranet and Web site, Tacca had his first customer. That led to orders from five SIBF members for work worth more than $250,000. "Without the competition we might have ended up as a little mom-and-pop," says Tacca, who is projecting that AtlanticWeb's revenues will reach $3 million in 1998.
Even before teams face off in a business-plan tournament, the buzz surrounding an entry can pique investors' interest. At Harvard Business School this year, three M.B.A. candidates proposed Zefer Corp., also an Internet consulting company. The idea--to provide the ultimate in "intelligent Internet solutions"--so wowed Paul Gompers, a professor of finance at Harvard, that in June he joined Zefer's advisory board. Gompers midwifed a deal between Zefer's founders and Silicon Valley Bank, which extended a $250,000 line of credit to the company. By the time the Zefer plan won Harvard's competition, in June, the company had raised $2 million in seed equity. It eventually drew five of its nine partners from last spring's graduating class of Harvard M.B.A.'s. "When a company is starting out," says Anthony Tjan, 27, Zefer's CEO and a former consultant at McKinsey & Co., "having the Harvard network and the Harvard name is a great help."
Merely participating in a business-plan competition can yield dividends. In a competition this year at Babson College in Wellesley, Mass., four Babson students' proposal to start yet another Internet company, Highwired.Net, won first prize. By the time the team competed at the University of Texas at Austin, three weeks later, it had raised $450,000 from angel investors and other students. In the Austin contest the Highwired.Net plan won in the Internet division but lost overall. The foursome won perhaps its most significant victory when one of the judges and a colleague sallied forth to invest $50,000 apiece in the new venture.
Spawning start-ups at San Diego State
How does the business-plan competition at San Diego State University, in which about 50 of the school's 700 M.B.A. candidates participate, help some students to launch companies? To find out, staff writer Marc Ballon spoke to Alex De Noble, a professor of management and entrepreneurship at San Diego State and the director of its annual tournament.
Q: Of all the students writing business plans, how many of them go on to start companies?
A: Approximately two or three companies a year.
Q: Why so few?
A: Most students work for entrepreneurial companies for a few years before starting their own. We don't want to encourage people to start their own business immediately unless they're really ready.
Q: Do you ever put students in touch with investors?
A: When students come up with something truly exciting and promising, we'll put them in touch with an angel to help them improve the plan. Of course, if an idea excites an investor, he might invest in it himself.
Q: What business experience does your typical student have?
A: The average age of our students is 28 or 29. They're older. We're attracting a higher caliber of students. We have more students seeking us out for entrepreneurship than ever before. Many come to us with deep industry experience.
Q: What's the advantage of entering a business-plan competition, as opposed to just doing it on your own? Bill Gates dropped out of Harvard and seems to have done all right.
A: Yes, people do write business plans on their own. People do drop out of school and start phenomenal businesses. But I think more people would stand a better chance of doing something special by going through a competition that teaches students how to present a plan and exposes them to the types of questions investors will be asking. Also, there is so much opportunity for networking.
Q: The finalists in San Diego State's business-plan tournament compete in an intercollegiate showdown. How does San Diego State benefit?
A: The public-relations benefits have been enormous for us. The competition has certainly raised San Diego State's profile and helped us attract funds and better students to our entrepreneurship program.
Counting companies hatched
Among the universities that stage business-plan competitions and track the number of resulting companies are
| |
Total yearly prize money |
Number of companies launched since 1996 |
| MIT* |
$50,000 |
20 |
| UNIVERSITY OF TEXAS AT AUSTIN* |
$18,000 |
15 |
| HARVARD |
$25,000 |
12 |
| UNIVERSITY OF ARIZONA |
$5,200 |
11 |
| UNIVERSITY OF OREGON* |
$14,000 |
6 |
| UNIVERSITY OF CHICAGO |
$30,000 |
5 |
| UNIVERSITY OF GEORGIA* |
$1,000 |
3 |
*hosts intercollegiate competition
