They are a different kind of student; they tend to think of new ways of doing things, and if they dont make it this time, theyll be back to try again next year.
The judges are quick to call teams on any inconsistencies or verbal sleight-of-hand. At least two of the final eight last year were asked why financial figures presented at the Venture Fair differed from those published in their written plans.
One of last years great eight was Air in Motion, a plan to sell franchises for wind farms built on land whose owners might wish to augment their income from farming or other activities. The company would generate revenue from the franchises amid growing demand for clean energy and by selling the resulting carbon credits to other energy producers with plants whose emissions exceed air-pollution standards.
Air in Motion looked hard to beat. It was an idea that would cash in on a global surge in wind-energy capacity, had the audacity to carve a niche for independent entrepreneurs selling power to utilities, and contained more than a whiff of idealism. The trouble was, as a former competition judge noted privately after the presentation, Air in Motion seemed to have ignored the possibility that future owners might not want enormous wind turbines on their properties, however enthusiastic the present ones might be, thus jeopardizing the projects long-term prospects. This drawback would be apparent to any venture capitalist. Whether his reasoning was correct wasnt statedbut Air in Motion won nothing in the final of the competition.
The idea that did take the $20,000 top prize was PAWS Pet Health Insurance, an underwriting manager offering accident and illness coverage to U.S. pet owners. The judges apparently accepted the companys argument that demand for its services would be driven by technical advances in veterinary medicine, such as chemotherapy and the use of pacemakers; by an increasing demand for near-human levels of veterinary care; and by demographic trends showing a sharp rise in the number of households for which pets are surrogate children.
The idea was sparked by the serious illness of a cat named Bodey, which cost its ownersteam members Chris Ashton WG03 and Natasha Ashton WG03$5,000 in veterinary fees. With fellow team members Alex Krooglik WG03 and Laura Bennett WG03, they used the experience to launch a business to serve the 99 percent of U.S. pet owners who have no health insurance for their animals. That contrasts with the Ashtons home country of Britain, where pet health insurance is more common.
An elated Laura Bennett said that winning the award vindicated their hard work and self-belief but was something of a surprise because their concept didnt seem to match the backgrounds of the judges, which were in technology and biotechnology. The victory was an extra boost for a business that was going to be launched regardless of the results of the competition, she added.
They have identified an underserved and growing market that has enormous potential, and they had superb research, according to judge David Piaquad, vice president for business development at Johnson & Johnsonwho added, however, that picking the winner was very difficult because of the high standards of all eight finalists. The first runner-up, winning $10,000, was Biogenomix, a drug-development company focusing on advanced therapeutic treatments for vascular, inflammatory, and infectious diseases.
The same determination to make it work, no matter what, was expressed by Kevin OHandley WG03, leader of Ferrosolutions, a company that has designed a device to generate energy from the vibrations in a local environment, such as a ship. It was nice to have made it to the final eightin fact, his team won $5,000 as second runner-upbut he insists that the business plan was going ahead, anyway. He was similarly undeterred by the difficulty of finding capital in the current bear market. Good ideas always find funding, he said. A lot of venture capitalists are still sitting on a lot of money.
One past entrant that has made the transition from concept to company is Coolsource Technologies, a Philadelphia-based educational software company, which, a year after winning the education track of the competition, is now a going concern with nine paying clients, five employees, and a total of $1.1 million in funding.
Coolsource designs learning programs for students in third through eighth grades that identify individual learning requirements much more quickly than a teacher normally does, says CEO J. Christopher Pienkowski WEv03. If youve got a class of 30 students it may take until November [from the start of the school year in September] to evaluate each student and adapt to their learning needs, he says. But with our software you can conduct that assessment within the first week.
The software is in use at nine schools in the Philadelphia area and 20 others have agreed to use it. Why the name? If you want kids to use it, its got to be cool, Pienkowski says.
The fee of $3 per student per month is not likely to make Coolsource employees rich any time soon. Its more the social good that motivates his team, Pienkowski says. In taking its business to market, Coolsource has also benefited from being accepted into Whartons Venture Initiation Program, which provides support such as legal, accounting, and administrative services for startup companies. While not yet profitable, the company is at least generating revenue.
Pienkowskis passion for his project is the most important requirement for success in the competition, says a 2002 competition judge, Dr. Mitchell Blutt C78 M82 WG87, executive partner at the private equity fund J.P. Morgan Partners and a Penn trustee. Focus on a business idea that you have great passion about, he advises. Beyond that, be clear on your competitive advantage, have a large-enough market, and a strong management team with appropriate backgrounds. Seek outside input on your business plan, rehearse its presentation, and avoid all technical jargon.
The rigorous prescriptions for those brave enough to start a business are more important than ever in light of the stock-market slump of recent years, the anemic rate of economic growth, and the low level of business confidence, Blutt adds. The marketplace for startups in the last couple of years has been abysmal, he says. There have been very few initial public offerings, and in that environment, venture capitalists are much more skittish. Such an environment is a meaningful dissuader for some startups, but others will go for it anyway, Blutt says. If theres no proper financing they will bootstrap it together using funds begged or borrowed from friends, relatives, and savings accounts.
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By Jon Hurdle
Illustration by Josef Gast