Early-stage businesses face myriad challenges.
Startup competitions, sometimes known as pitch competitions or business plan competitions, address several: attracting startup capital, building investor and advisor networks, raising visibility in the marketplace, iterating business models and plans, and uncovering new ways to cut business costs.
Directly or indirectly, these benefits all accrue to startup competitors’ bottom lines. And that’s no trivial thing. According to the Global Entrepreneurship Monitor 2015/2016 Report, more than half of all nascent companies that shut down do so due to lack of funding or persistent negative cash flow.
If your early-stage company is looking for new sources of startup capital, a startup competition could be just what the doctor (or business advisor) ordered. In this guide, we’ll examine:
- The ins and outs of startup competitions
- The different types of startup competitions, with examples
- Choosing and entering the right competition for your business
- Getting the most out of your chosen competition – and, just maybe, winning it all
- The pros and cons of participating in startup competitions
What Are Startup Competitions?
Most startup competitions share some common parameters:
- Prizes. All startup competitions by definition exist to reward compelling pitches or business plans delivered by individual entrepreneurs or teams. They virtually award cash prizes to at least one outright winner, and usually multiple finalists or runners-up assigned to size, stage, or industry categories.
- Eligibility Restrictions. Many startup competitions are restricted to specific industries or sectors, such as green technology or consumer software. Some are further restricted by participant identity or geography: Student-only and statewide competitions are both common, for instance. The next section outlines some common competition types.
- Location and Relocation Requirements. Even if they’re not geography-restricted, competitions generally take place in defined locations. Participants are expected to be physically present for competitions’ culminating events, known as pitch days. Some competitions may require participants to be physically present for the entire duration – weeks or months, potentially.
- Network Access. Startup competitions generally provide at least some exposure to subject matter experts and industry leaders, who may serve as advisors or mentors throughout the process. Startup competitions also attract potential investors and partners. It’s quite common for advisors or mentors to invest in promising startups that surface during competitions, provided no conflicts of interest or prohibitions against such activity exist.
Don’t confuse startup competitions with business incubators. Though there’s some practical overlap between the two, business incubators generally have open-ended timelines and involve more hands-on and holistic support from advisors, mentors, and other program support staff. This support touches on virtually every aspect of the startup experience, not just the business plan and pitch. Incubators aren’t explicitly competitive, either: Organizers only winnow participants during the application process, not while the cohort itself is active.
Startup accelerators have more in common with startup competitions, though the terms aren’t used interchangeably. Like competitions, accelerators have fixed terms and hands-on support from mentors and advisors. Unlike competitions, accelerators aren’t by definition competitive – the support structure is incubator-like. Accelerator cohorts tend to be smaller than competition cohorts too. As in incubators, winnowing occurs before the cohort begins its work.
Startup Competition Types & Examples
These are four popular types of startup competitions. Note that not all competitions fall into neat or exclusive categories – some can plausibly make the case for inclusion in two or more categories.
Student and University Competitions
Examples: MIT Clean Energy Prize, UMass Innovation Challenge
These competitions are generally organized by universities or schools within universities, sometimes in collaboration with nonacademic partners. Admission is often, but not always, restricted to students – sometimes just undergrad or just grad students, depending on the competition. Advisors have academic and business backgrounds.
Student and university competitions’ prize money may be awarded from university endowments, external pots funded by corporate sponsors, or both. High-profile events promise impressive windfalls: The MIT Clean Energy Prize grand finalist takes home $100,000 each year. For others, such as the UMASS Innovation Challenge (comprised of four different pitch competitions), prize money is secondary: The most competitive UMASS Innovation Challenge competition involves competing for the right to compete for prize money.
Examples: MN Cup, New Orleans Entrepreneur Week Big Idea
These competitions showcase local startup ecosystems. They’re often built around larger festivals, such as New Orleans Entrepreneur Week (which features several pitch competitions) or any of the annual major-metro “startup weeks.” Admission is often, but not always, restricted to entrants with local connections – MN Cup, a multi-month event based in Minneapolis, demands at least one Minnesota-based or -associated member on each team.
Location-based competitions’ prize money comes from event sponsors and supporters, often an eclectic mix of private companies, state or municipal agencies, nonprofit foundations, and individual or corporate investors. Pot sizes vary widely: MN Cup’s annual pot totals more than $450,000, with the winnings spread among more than a dozen category winners, finalists, and grand prize winners.
Company-sponsored startup competitions are so named because they have one dominant sponsor. For deep-pocketed multinationals like IBM (SmartCamp) and Microsoft (Innovate AI), a six- or low-seven-figure grand prize is a drop in the bucket – and a small price to pay to surface new ideas with the potential to disrupt entrenched industries.
Speaking of disruption: One of the best-known company-sponsored contests, Disrupt, is an exception that proves the rule. Sponsored by tech publication TechCrunch, the San Francisco event is a near-legendary showcase for groundbreaking entrepreneurs. As a general rule, high-profile events like Disrupt and big-money confabs like Innovate AI (grand prize: $1 million plus $500,000 in Azure credits) are fiercely competitive.
Conference-based competitions happen at or on the sidelines of entrepreneur and investor conferences, such as WebSummit and Collision. Admission may be restricted to ticketed conference attendees, though many conferences have separate admission tracks for resource-poor startups.
Prize money is not always the main draw at conference-based competitions. Due to the high concentration of potential investors and buyers on-site, the promise of exposure – and subsequent connections made on the conference floor – is enough to entice entrants. That’s not to discount the potential payoff: WebSummit PITCH’s 2016 grand prize was a cool €100,000.
Pro Tip: There are hundreds, if not thousands, of startup competitions out there. Dozens of new competitions pop up every year. For an up-to-date list of opportunities and notable participants, check out competition aggregators like Startupcompete.co.
Choose & Enter the Right Startup Competition
Don’t waste your time applying to every startup competition you hear about. Follow these best practices to choose the most appropriate competition(s) for your enterprise.
1. Look for Competitions in Your Industry or Niche
Stick with competitions most directly applicable to your industry or focus. For instance, if your company can classify itself as a social enterprise, look to competitions built by and for do-gooders. If your solution focuses on clean energy or sustainability, look to one of the many green competitions. If your team is comprised of students, stick with competitions restricted to students or endowed with student categories.
If you can’t find a snug category fit, look to generalized competitions instead. Statewide competitions, such as MN Cup, attract eclectic cohorts whose members often don’t meet more restrictive competitions’ entry requirements.
2. Consider the Cost of Travel and Lodging
Applying only to local startup competitions is a great way to reduce transportation costs for your cash-poor enterprise. Even short-duration competitions that demand only a few days’ commitment carry unavoidable costs: round-trip airfare, hotel or short-term rental charges, food and incidental expenses. Even for a short-term domestic competition, you’re looking at several hundred dollars per person. International and longer-duration competitions can be a whole lot costlier.
3. Seek Out Relevant Mentors and Advisors
Startup competition organizers rightly play up their advisors’ experience and expertise. Most attract top-tier talent eager to give back to entrepreneurs following in their footsteps. If you’re simply looking to rub shoulders with industry luminaries, it’s hard to go wrong at any well-known startup competition.
But merely hobnobbing with prominent VCs and executives shouldn’t be your top priority. It’s far more important that you connect with mentors whose expertise is directly relevant to your enterprise. Ideally, you want to encounter people who’ve crafted or invested in solutions similar to yours, and those who know your niche or market well. For everyone you stand to meet at your chosen competition, ask a simple question: How can they help me?
4. Look Beyond the Competition Itself
Not every startup competition is a main event unto itself. Local startup weeks, for instance, typically feature a slew of programming separate from their pitch competitions, if they even have pitch competitions. Festivals like SXSW have far more on the agenda than any single entrepreneur can possibly take in. Attendance at such events is a valuable end in and of itself, particularly for entrepreneurs seeking access to expertise outside competition frameworks or exposure to the sorts of tantalizing new paradigms that seem to waft on the wind at major confabs.
5. Sniff Out the Big Money
Getting into a marquee pitch competition that attracts entrepreneurs from around the world is much tougher than earning a berth in a local startup week tie-up. But the financial payoff may well be worthwhile. Pitch competitions tied to major industry events, such as Launch Festival, often boast total purses worth $1 million or more. Past Launch Festival grand prize winners have taken home $250,000 each – life-changing money for an early-stage business.
Get the Most Out of Startup Competitions
So, you’ve been accepted into your first startup competition. Congratulations! Now, follow these tips and best practices to get the most out of your experience.
6. Clearly Identify a Problem to Solve
First, you need to articulate the problem you’re trying to solve. This part of your pitch needs to answer questions like:
- What is the problem, issue, or inefficiency you’re going after?
- Why is it a problem? (In other words, why should people pay you to solve it?)
- Is the problem big enough to warrant a solution?
- How big is the market for your solution? Is the problem serious enough to attract customers’ dollars in the first place?
Translating a legitimate problem into a compelling business case requires a value proposition, which HubSpot describes as “a promise of value to be delivered [and] the main reason a prospect should buy from you.” Your value proposition is the hook or peg around which you build the rest of your pitch.
7. Listen to Advisors and Mentors
Throughout the competition, listen to your advisors and mentors. Access to expertise is a major selling point for most startup competitions. It may well have been the determinative factor in your decision to apply. Take full advantage of it by:
- Learning as much as you can about your advisors and mentors ahead of time, so you know how best to tap their expertise
- Using every minute of your time with advisors and mentors if you don’t have 1-to-1 access
- Asking their opinions on matters large and small, even if the answers seem obvious
- Pushing them to open up about their own experiences if they’re not forthcoming
- Being eternally humble – remember, they’re in the advisor seat because they know more than you
8. Keep Your Pitch Short and Sweet
Some pitch competitions strictly enforce time limits on competitors’ pitches. Save yourself the embarrassment of hearing wind-up music (or, worse, having your mic cut) by trimming superfluous material and practicing relentlessly to get your pitch in well under the limit. Cut out sentences and slides that don’t provide essential context or bolster your value proposition.
9. Establish Your Credibility Early
Credibility qualifies as essential context. You need to demonstrate early and convincingly that your team is well-suited to solve the problem at hand, build the solution you’ve conceived, bring the solution to market, and erect a profitable enterprise around the whole thing.
How you communicate your team’s credibility depends on the nature of the problem you’re solving and the solution itself. You might play up:
- Your team’s academic background and credentials (or yours, if you’re flying solo)
- Practical experience in your field and with the problem you’re solving, if any
- Practical competencies relevant to your enterprise, e.g. fluency with relevant programming languages or engineering methods
- Notable board members with relevant credentials
- Notable advisors in your corner with relevant credentials
- Prior fundraising rounds and totals, if any
- Prior accolades, including other startup competition wins
10. Tailor Your Pitch to the Audience
Before applying, learn as much as you can about who attends your chosen startup competition. Tailor your pitch accordingly, leaning on input from your advisors and network as necessary. While no two audiences are exactly alike, knowing whether you’ll be pitching primarily to potential investors, industry professionals, customers, or a mixed crowd goes a long way.
11. Avoid Over-Presentation
Your pitch needs to be polished and professional, but you don’t have to go overboard. You’re not debuting a new Apple device here, after all. Avoid presentation elements that distract from the meat of your pitch:
- Overproduced videos and multimedia elements
- Dense or superfluous slide text
- Questionable stage props or audience handouts
- Stimulating audiovisual elements, such as loud music soundtracks
12. Maintain an Open Mind
Decisiveness and open-mindedness aren’t mutually exclusive. You can make and follow through on consequential decisions with potentially existential ramifications for your enterprise and allow that you’ll adjust course if and when new information comes to light.
Based on your startup competition experience, feedback from advisors and mentors, and observations of other entrepreneurs in roughly comparable situations, you may well determine that you need to adjust or revamp your pitch – or entire business model. Painful as it is to admit your idea or approach needs work, you’ll thank yourself for doing so before you’ve invested substantial sums of money (your own and investors’), time, and emotional energy in the enterprise.
Advantages of Participating in Startup Competitions
1. Potential to Win Serious Money
Startup competition participants stand to take home serious money – if they win or place, of course. The best-funded competitions promise six- or even seven-figure sums to the grand prize winner. Even more “modest” five-figure prizes can be game-changers for cash-strapped founders who quite literally aren’t sure where they’ll find their next meals.
2. Opportunity to Network and Gain Exposure
You don’t have to take home a cash prize to get your money’s worth out of a startup competition. Just making it through counts as a win.
Richard Carthon, TEDx speaker and founder of FollowMyCal, knows this better than most entrepreneurs. Enticed by the prospect of rubbing shoulders with the South’s top tech entrepreneurs and by the prospect of taking home the $25,000 grand prize, Carthon entered New Orleans Entrepreneur Week’s Big Idea pitch competition a few years back.
“The prize money did play a part in my decision to apply,” he admits, “but I knew I’d be able to network with people who could help my company in various ways.”
Carthon’s intuition was spot-on. Though he didn’t win the prize, he did meet two prospective investors who later plowed money into FollowMyCal – a fortuitous outcome that simply wouldn’t have come about had Carthon stayed home.
“I’d advise anyone entering a startup contest…to maximize the exposure that comes with participating in these events,” he says. In other words, network your tail off.
3. Opportunity to Broaden Your Talent Pool
Prospective investors and mentors aren’t the only people worth meeting at startup competitions. Popular competitions draw talented engineers, marketers, and management gurus all seeking new challenges and opportunities. If you’re looking to add to your team, you might just find the perfect fit in the audience.
More popular startup competitions attract media attention, especially from business, tech, and daily publications. Simply signing up for a startup competition doesn’t guarantee you a feature-length article in a national business magazine or even a write-up on a local tech blog, but the possibility is there. Rework your pitch for newsy effect and raise its appeal to media wags in attendance.
4. Chance to Refine Your Pitch and Business Plan
Beyond fortuitous connections and the prospect of free publicity, startup competitions offer invaluable opportunities to test and refine your pitch and business plan in front of a live audience. If you’re still in the pitch-to-your-mirror-reflection-and-pets stage, your first startup competition is your chance to see how real people react to your spiel.
5. Doesn’t Require a Marketable Product or Service
Pitch competitions are so attractive to early-stage companies in part because they don’t necessarily require a marketable product or service. For the sorts of audiences you’ll likely be pitching to, proof of concept is sufficient.
This means product startup founders can apply to competitions before making any substantial investments in market research or testing, and certainly before ramping up production. Service and software startups can apply while their solutions remain in beta.
6. Potential to Boost Your Confidence
Hopefully, they’ll react well. Even if they don’t, you’ll learn from the experience (provided you allow yourself to learn). Either way, see your pitch – and the entire contest experience – as a rare opportunity to command a room and draw attention to your vision. The more you pitch, the more your confidence will grow – or the clearer it’ll become that you need to dramatically rework your idea.
Disadvantages of Participating in Startup Competitions
1. Require Weeks or Months of Your Attention
Some startup competitions are over in a relative flash. They might require participants to assemble in one place on a single afternoon or evening, pitch their concepts in rapid succession, take home their prizes (or not), and move on.
But others demand participants’ time and attention for weeks or even months. MN Cup, for instance, runs nearly six months from start to finish, though only finalists need see it all the way through.
If your company doesn’t have the time or bandwidth to devote to a months-long startup competition, it’ll necessarily miss out on potentially game-changing opportunities. Even if you feel confident in your decision to participate in a given competition, never forget that new complications or opportunities can arise midstream. Entrepreneur lore is rich with stories of founders who slogged through weeks- or months-long competitions, only to miss the final pitch because of an unforeseen conflict (often a last-minute opportunity to pitch to a higher-value audience).
2. May Require Long-Distance Travel or Temporary Relocation
As a general rule, pitch competition organizers expect participants to come to them. That means travel, probably by air, and the prospect of short-term relocation for longer-duration competitions. On a shoestring budget, it’s probably not wise to go all-in on a transcontinental relocation to a European or Asian pitch competition, however tempting the lineup or snug the niche fit.
You Might Also Like: If you do plan to relocate temporarily for a pitch competition or startup accelerator, or you find yourself traveling a lot to meet investors and advisors in other parts of the country or world, consider applying for a credit card that pays – literally.
Our list of the best travel rewards credit cards boasts a few small business options. And our list of the best small business credit cards has several cards designed with frequent business travelers in mind.
3. Potential for Embarrassment
Going into a pitch with the expectation that you’ll be laughed off the stage isn’t exactly a recipe for success. Still, plenty of entrepreneurs advise less experienced founders to acknowledge and envision the worst-case scenario before it happens. The startup community is famously (and mercifully) tolerant of failure, but its capacity to ignore ill-conceived ideas isn’t unlimited. It pays to be prepared for the prospect of a truly disastrous showing – and the inevitable soul-searching that follows.
Starting a company from scratch is a terrifying prospect. It’s no wonder the business formation rate is near a 40-year low, per CNN. With so much else on your plate, applying for startup competitions may well be the least of your worries.
If you’re confident that you can connect with investors, advisors, and employees elsewhere, perhaps you’re better off steering clear. Ultimately, your enterprise will be judged on its own merits and staying power, not on its early-stage particulars.
Have you ever participated in a startup competition? Are you planning to apply to any soon?