The Value of Losing Business Plan Competitions
The next Accelerate Michigan Innovation Competition will take place on Thursday, November 3, 2016 in Downtown Detroit. If you are in Michigan and have started a company, you should participate. First prize is $500,000, which is a lot of money for an early stage company to bring in.
Last year, Banza, a producer of chickpea-based pasta, took home first prize. Data aggregator Crunchbase reports that Banza raised $1.3 million last November, shortly after the competition, indicating that winning the competition probably helped them with their fundraising.
Of course, the benefit of winning a competition is kind of obvious. It’s more interesting to see how the losers benefit from their participation.
Benefits of a Business Plan Competition, Even if You Lose
Consider Passage, a mobile box office for specialty events, festivals, sporting events and the like. They didn’t win last year’s Accelerate Michigan competition. They didn’t even take first prize in one of the industry categories. But Passage still benefited in three big ways from participating in the competition.
First, pitching in the competition helped founder Alex Linebrink figure out his value proposition. He explains, “Entering helped us figure out that we help our customers three ways. First, we help them to create brands because we’re the only ticketing and payments service creating brands, features and functionality unique to each specialty event vertical. Second, we get event organizers paid within two days of selling a ticket. Other solutions pay them over a week after the event. Third, we’re simple. Event organizers can set up and be selling tickets within minutes. Then they can use it to sell online, to sell at-the-door, tickets, merchandise, AND concessions: all on one system. No more juggling eight different payment accounts, just one easy-to-use platform.”
Second, entering the competition helped Alex network his way to investors. Every time an entrepreneur gets to pitch his or her business to potential investors, he or she gets an opportunity to build his or her network. Even investors who don’t fund a company are valuable because they lead to other investors. While Alex Linebrink didn’t meet any investors at Accelerate Michigan who contributed to his six-figure raise late last year, he did meet people who connected him to others who put money into his business.
Third, participating in Accelerate Michigan helped Alex get better at selling. Here’s Alex on that point: “Delivering my pitch at the competition showed me how to identify people with a compelling reason to buy my product. I learned to identify the right target markets for Passage and how to explain why we are so valuable to customers who run wine and beer festivals, theaters and semi-pro and high school sporting events.”
I’ve only given a few reasons why entering a business plan competition will help you as a startup company founder. There are many more.
So if you are an entrepreneur, go enter a few business plan competitions. If you win, great. If you don’t, also great. Your startup effort will be better off either way.
Planning Photo via Shutterstock