Entering business plan competitions can help fledgling entrepreneurs grow their new companies. A new study of 354 startups who participated in the annual Rice Business Plan Competition (RBPC) shows these entrepreneurs have a much higher rate of success than typical new ventures. Thus, chemists starting their own companies could benefit from entering the RBPC or similar business plan competitions. The RBPC is the world’s largest and richest business plan competition. The longitudinal study covers the 11-year (2001 – 2011) life span of the RBPC. It provides insights into the experiential factors that can help entrepreneurs launch a successful business. Whether or not you enter your fledgling chemical business in one of these business plan competitions, the complete report on the RPBC could provide useful suggestions on how to increase the prospects of success for your startup chemical business. That report can be found at:
Details of the RBPC
Teams that compete at the RBPC present their ventures to more than 250 venture capitalists, angel investors, corporate investors, mentors, successful entrepreneurs and other leaders from the business community, where they have a chance to get mentoring, feedback, start-up capital and connections.
Entry into the Rice competition has become more competitive each year. In 2012, less than 3% of the 1,600 applicants were accepted. The states with the largest number of competitors during the first 11 years were Texas, California, Illinois, Massachusetts and Georgia.
The universities with the largest number of teams accepted to compete at the RBPC include Rice University, Massachusetts Institute of Technology, University of Texas at Austin, University of Michigan, Johns Hopkins University, University of Arkansas, Carnegie Mellon University, University of Chicago, Southern Methodist University, University of Illinois at Chicago, Georgia Institute of Technology, Northwestern University, Duke University and Stanford University.
Results of the RBPC
Using data on the 354 RBPC graduate-student competition teams from 2001 to 2011, the study found:
- 199 of the entrepreneurs (56%) went on to launch their companies after competing at the Rice competition.
- 128 of those (64%) are successful and still in business today. In comparison, only 20% to 50% of startups survive to their fifth anniversary.
- Past competitions have raised more than $460 million in early stage funding.
- A conservative estimate of jobs created tops 1,000.
According to the Kauffman Foundation, in the past 30 years, all net job creation in the U.S. has taken place in firms less than five years old. (The Kauffman Foundation is a private, nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare.)
“The study shows that university business plan competitions can go beyond simply being an academic exercise or educational experience,” said Brad Burke, managing director of the Rice Alliance. “They can serve as a vehicle for building a robust entrepreneurial ecosystem and as a launching pad for new businesses, especially high-tech, high-growth startups.”
“The Rice Business Plan Competition’s track record is unparalleled in creating new, successful high-tech startups,” said Kauffman Foundation Vice President Lesa Mitchell. “The competition provides access to venture capital and other early stage investors, strategic partners, mentors and service providers – not to mention more than $1 million in seed funding and other prizes – all critical resources for successfully launching a new company and creating jobs.”
One-quarter of the successful startups from the competition have raised venture capital funding. This compares to less than 1% percent of startups that typically get venture capital funding. Of the total $460 million in funding raised, 62% came from venture funding, 13% from angel investors and 13% from government grants. (Angel investors are usually found among an entrepreneur’s family and friends. The capital they provide can be a one-time injection of seed money or ongoing support to carry the company through difficult times.)
The RBPC results have shown to be a good predictor of a company’s success, based on the winners and teams that reached the finals. All of the winners in the RBPC from 2004 to 2011 have been successful, are still in business and have raised more than $107 million in funding. Of all the teams that reached the finals from 2001 to 2011, 56% have been successful and have raised more than $269 million in funding.
John Borchardt was a chemist, freelance writer and devoted ACS career consultant for over 15 years, until his sudden passing in January 2013. He was the author of the ACS/Oxford University Press Book “Career Management for Scientists and Engineers,” and had more than 1500 articles published in a variety of magazines, newspapers and encyclopedias. As an industrial chemist, he held 30 U.S. and more than 125 international patents, and was the author of more than 130 peer-reviewed papers. John’s advice, insights and articles helped hundreds of scientists improve their professional lives, and he will be truly missed.