Business plan challenges are competitions used by government, universities and private sector organizations to help train and equip entrepreneurs, as well as launch their ventures. A business plan challenge incentivizes teams or individuals to propose new startups focused on innovations in technology, products and services by providing training and prizes for the best viable businesses.
A business plan challenge consists of a six-stage process:
- Establish goals for the program design and launch the challenge.
- Cultivate and engage networks of participants.
- Judge challenge submissions.
- Provide mentoring or training programs to further develop the entrepreneurial ventures.
- Conduct a pitch contest or demonstration to select the winners of the prizes, which can include recognition, in-kind services from private sector partners and monetary incentives.
- Evaluate the impact of the program and work with winners to leverage business or technology transfer resources where appropriate.
Business plan challenges can be designed for many different goals and can achieve a variety of desired outcomes. Some challenges focus on attracting talent to new and exciting technical fields. Others focus on solving market challenges by providing rapid validation of new business innovations through mentorship, training and prizes. Many challenges are designed to stimulate new sectors of the economy or to leverage orphaned intellectual properties or underused technologies as part of an agency's technology-to-market efforts.
Rather than seeking specific point solutions, these prizes often are used to encourage mass participation and shape the commercial trajectory and career pathways of individual participants. These challenges allow promising entrepreneurs to test their ideas and vet them through supervised training and review. Business plan challenges often leverage expertise in different fields through judges and mentors, and offer a unique opportunity for the larger entrepreneurial ecosystem to have exposure to new solutions proposed in different fields.
Business plan challenges are geared to new or newly formed ventures, rarely being used to attract well-established startups or small businesses. Typically, post-business plan challenge activities include joining an accelerator or a business incubator, where these newly formed startups can continue to receive the services and support to grow their ventures.
Business plan challenges have been used by universities for decades as a way to both incentivize technology transfer and engage student populations to develop skills for growing and launching ventures. Examples in universities include the Rice Business Plan Competition, the MIT 100k Competition and the GW New Venture Competition. These competitions are geared specifically to student populations. They can be restricted to include only students from a respective university, or they can be opened up to university students across the nation or world.
Almost any agency or government organization can use a business plan challenge. As long as there is an opportunity for entrepreneurs and new venture creation, a business plan competition can be launched. Agencies can sponsor a prize for an existing competition such as the Rice Business Plan Competition, which has been sponsored by the U.S. Department of Energy and NASA. They can also create a new business plan competition.
Over time, other types of organizations have started using this model to incentivize growing industries to support entrepreneurs. Startup pitch contests and business plan competitions now are being run by an array of private sector organizations, including the 1776 Challenge Cup, the Think Beyond Plastic Innovation Competition and the Clean Energy Trust Challenge.
While not mandatory, many of the most successful teams include a multidisciplinary approach to developing a new entrepreneurial venture. Many universities have begun developing courses to incentivize the creation of cross-disciplinary teams among different departments. The Northwestern University NUvention and the MIT Energy Ventures courses are just two examples of such an approach.
Many universities also encourage their research departments to work with business students to create viable business models for technology developed on campus. By bridging the gap between business- and entrepreneurial-focused talent with research, the team dynamics can often be improved. Additionally, creating interdisciplinary teams offers a variety of benefits, including equipping researchers with business principles and offering real-world settings for business and policy students to use their skills to help develop a venture.