Business plan competitions may be key to job growth

Sep 20, 2012

A new study of high-tech startups that participated in the Rice Business Plan Competition (RBPC) shows that these entrepreneurs have a much higher rate of success than typical new ventures and are therefore more likely to contribute to job growth.

The study by the Rice Alliance for Technology and Entrepreneurship spans the 11-year life of the RBPC, the world's richest and largest business plan competition, which comprises teams of graduate students from throughout the world. The comprehensive and offers insights into the experiential factors that can help entrepreneurs launch a successful business.

Using data on the 354 RBPC graduate-student competition teams from 2001 to 2011, the study found:

  • 199 (56 percent) went on to launch their companies after competing at the Rice competition.
  • 128 of those (or 64 percent) are successful and still in business today. (Typically, only 20-50 percent of startups survive to their fifth anniversary.)
  • Past competitors 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 in the U.S. has taken place in firms less than five years old, and this is consistent with the experience at the Rice Business Plan Competition. The Kauffman Foundation is a private, nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve .

"The study shows that university business plan competitions can go beyond simply being an academic exercise or ," 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-," said Kauffman Foundation Vice President Lesa Mitchell. "The competition provides access to 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."

The study showed that as a result of the quality of the competitors and this access to investors, 25 percent of the successful startups from the competition have raised venture capital funding compared with less than 1 percent of startups that typically get venture capital funding. Of the total $460 million in funding raised, 62 percent came from venture funding, 13 percent from angel investors and 13 percent from government grants.

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 (with the exception of one team that decided to pursue other avenues to commercialize its technology). Of all the teams that reached the finals from 2001 to 2011, 56 percent have been successful and have raised more than $269 million in funding.

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, capital and connections.

Entry into the Rice competition has become more competitive each year, and in 2012, less than 3 percent 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.

The study shows that the Rice Competition provides a model that other organizations can follow to support entrepreneurs who, in return, will create jobs and build economic prosperity in the U.S.

Explore further: 3 Qs: Economist makes the case for new quasi-experiments as a way of studying environmental issues

More information: For a complete copy of the study, go to www.alliance.rice.edu/uploadedFiles/RBPC/2012_RBPC_ImpactReport.pdf

add to favorites email to friend print save as pdf

Related Stories

Purdue holds science business competition

Apr 10, 2006

Purdue University is seeking entrants for a life sciences business plan competition describing the best path to market for products and technologies.

Technology Start-Ups Get Tips on Starting Out

Dec 14, 2007

Talk more about business and less about technology. Have a solid team. And consider calling on angels. Those were some of the key lessons at a UT Dallas workshop last week for would-be entrepreneurs seeking capital to turn ...

Venture-cap investments rise in 1Q

Apr 15, 2011

(AP) -- Funding to U.S. startups climbed during the first three months of the year, with venture capitalists putting more money into fewer companies, according to a study scheduled to be released Friday. Despite the decline ...

Entrepreneurs face venture capital funding drought

Oct 13, 2009

The number of US venture capital firms that raised new investment money sank to a 15-year low in the last fiscal quarter as a drought of funding threatened innovation around the world.

Recommended for you

Which foods may cost you more due to Calif. drought

Apr 17, 2014

With California experiencing one of its worst droughts on record, grocery shoppers across the country can expect to see a short supply of certain fruits and vegetables in stores, and to pay higher prices ...

Performance measures for CEOs vary greatly, study finds

Apr 16, 2014

As companies file their annual proxy statements with the U.S. Securities and Exchange Commission (SEC) this spring, a new study by Rice University and Cornell University shows just how S&P 500 companies have ...

Investment helps keep transport up to speed

Apr 16, 2014

Greater investment in education and training for employees will be required to meet the future needs of the transport and logistics industry, according to recent reports by Monash University researchers.

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

JoeBlue
1 / 5 (1) Oct 01, 2012
Really? They wasted money studying this? I could have opened any Econ book from 100 years ago and showed where it stated that already.

More news stories

Clippers and coiners in 16th-century England

In 2017 a new £1 coin will appear in our pockets with a design extremely difficult to forge. In the mid-16th century, Elizabeth I's government came up with a series of measures to deter "divers evil persons" ...

Airbnb rental site raises $450 mn

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.