Vice President, Industry & Venture Development
April’s featured funding opportunity is the Midwest Cleantech Open, the regional section of the Global Cleantech Open, one of the most prominent cleantech accelerators and business plan competitions. The Midwest Cleantech Open competition incorporates many of the primary benefits of participating in a business plan competition, with the upside of potentially competing in the larger-scale Global Cleantech Open. Those interested need to apply by June 1, 2015 (applications will be available soon).
What are the benefits of competing in a business competition? While still in the early days of our funding blog, a consistent theme has already emerged when discussing funding opportunities–time. Time is a precious commodity for startups and technology developers. For small businesses, there are many opportunity costs; and since human resources are often limited, it becomes vitally important to maximize the expected utility of an organization’s time. This month, I’d like to focus on the benefits of accelerators and business plan competitions, to help you assess whether your company’s participation is an effective use of time.
- A refined business plan/model
Participating in a business plan/pitch competition forces you to think critically about virtually every aspect of your company. The value of your technology, your target market and its size, your competitors, your key milestones, the strength of your management team, and your financial projections. This outside pressure provides an opportunity to take a step back and assess your company with a level of detail you may overlook on an everyday basis. And, by doing so, you become open to developing valuable new thought processes. Is the market big enough for continued growth? What are your company’s major pitfalls? Are your capital requirements realistic? Have we really thought through our risks? Are there ways to pivot our approach to market? Most business plan competitions/accelerators require you to confront and respond to these kinds of difficult questions that must be answered sooner rather than later.
- The perfect pitch
Let’s face it, pitching is important. Regardless of your role within the company, the company’s stage, or the company’s technology, interactions with potential customers, investors, strategic partners (and sometimes even friends and family) will depend heavily on a sound pitch. The art of pitching in a business competition involves presenting the most compelling overview of your company under a set time constraint customized to your audience. You have a limited amount of time to cultivate the interest of your audience and encourage them to take the next step, whether it be a follow-up phone call, tech demo, investment ask, etc. Business plan competitions force you to distill the million things you could say about your company into a well-rehearsed, micro-analyzed few sentences that is easy for your audience to digest and resonate with their interest. Practice makes perfect, and competitions are great practice for becoming your company’s pitcher in the big leagues.
Most business plan competitions furnish mentors to support their participants. This is true for those NextEnergy sponsors including the CleanTech Open, Clean Energy Challenge, Global Automotive Innovation Challenge, and Accelerate Michigan. The organizing bodies provide industry experts to work one-on-one with your team to provide advice, feedback on practice pitches, and business strategy coaching. These mentors are often hand-selected for a reason, as they generally have healthy experience in entrepreneurship, technology development, and business development. Many have led startup companies and have been through the same things you are now trying to address in taking your technology to market. This can be tough for some as these experts often challenge your market approach, business model, financials, etc. My experience is companies that listen and are coachable have the most to gain from the valuable mentorship service. Some business plan competitions are really “accelerators” which not only assign mentors, but assemble an entire entrepreneurial training program with lectures, mentorship engagements and networking, the Midwest Cleantech Open is unique in this way.
- Exposure leads to partnerships
Business plan competitions, especially those focused on the energy/transportation space are essentially convocations of professionals in the startup world–investors, entrepreneurs, technology experts, researchers, and industry representatives. These convocations culminate in forums that allow industry experts and investors to learn about the latest and greatest technology developers. You never know who you’ll meet at a competition and what that relationship will turn into down the road. I have personally witnessed our clients participate in accelerators/competitions and not only meet investors, but also connect with eventual customers, suppliers, channel partners, employees, and other key stakeholders that have helped them grow their business. Not every business plan competition participant takes home an award, but almost all take home a prize in strategic partners!
- Win cash and access to resources
The prize money, investment, or other in-kind awards a company receives for winning a competition are the most apparent upsides, but often they are relatively less valuable than the aforementioned benefits. However, the prizes are often nothing to sneeze at. Some competitions offer sizable cash awards for the top companies that can represent a legitimate avenue to non-dilutive capital. For instance, Accelerate Michigan offers up to $1 million in cash prizes for Michigan startups. Additionally, many competitions include in-kind awards such as consulting time, legal support, accounting services, free/reduced price business software, and other valuable services.
Just as you must do for every funding opportunity, you must do a cost-benefit analysis for pursuing the Midwest Cleantech Open. Participating in a competition is not the best choice for everyone (we’ve seen companies crash and burn because they weren’t the best fit, or too early). But now that the value of such competitions has been enumerated, hopefully you can make a more informed decision about how to spend your company’s time.
Let your competitive nature run free!