Business plan competitions may be key to job growth

Study shows Rice Business Plan Competition has launched nearly 200 new businesses, creating thousands of new jobs and raising big cash 

           

HOUSTON – (Sept. 25, 2012) – If you want to succeed in business you may want to consider competing in a business plan competition. A new study of high-tech startups that participated in the Rice Business Plan Competition (RBPC) shows a much higher rate of success than typical new ventures. These and other new businesses are the source of all job creation in the U.S. according to the Kauffman Foundation,  a private, nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare.

 

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 CompetitionTM of teams made up of graduate students from throughout the world. The comprehensive and longitudinal study offers insights into the experiential factors that can help entrepreneurs launch a successful business.  

 

Using data of the 354 past RBPC graduate student competition teams from 2001 to 2011 the study finds:

  • 199 (56 percent) went on 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% of start-ups survive to their fifth anniversary. 
     
  • Past competitors have raised more than $460 million in early stage funding.
  • A conservative estimate of 1,000-plus jobs have been created.

 

According to the Kauffman Foundation, in the past 30 years, literally all net job creation in this country has taken place in firms less than five years old, and this is consistent with the experience at the Rice Business Plan Competition.

 

“The study shows that university business plan competitions can go beyond simply being an academic exercise or educational experience,” Burke said. “They can serve as a vehicle for building a robust entrepreneurial ecosystem and serve as a launching pad for new businesses, especially high-tech, high-growth start-ups.” 

 

“The Rice Business Plan Competition’s track record is unparalleled in creating new, successful high-tech startups,” said Lesa Mitchell, vice president, Kauffman Foundation.  “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.”

 

As a result of the quality of the companies and this access to investors, the study shows that 25 percent of the successful startups from the competition have raised venture capital funding compared to 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 came 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 reach 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 their 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 over 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 to compete. The states with the largest number competitors during the first 11 years are: Texas, California, Illinois, Massachusetts and Georgia.

 

The universities with largest number of teams accepted to compete at the RBPC include: Rice University, Massachusetts Institute of Technology, University of Texas, 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 RBPC is supported by over 130 sponsors including Insperity, The GOOSE Society of Texas (angel investors), Waste Management, DFJ Mercury, Fortune Magazine, Kauffman Foundation, the NASDAQ OMX Educational Foundation, Greater Houston Partnership, Kleiner Perkins Caufield & Byers (KPCB), OWL Investment Group, Dept. of Energy, NASA Johnson Space Center Houston.

 

The study showed that the Rice Business Plan Competition provides a model that other organizations can follow to support entrepreneurs who will create jobs and build economic prosperity in this country.

 

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

  

About the Rice Business Plan Competition and Rice Alliance for Technology and EntrepreneurshipThe Rice University Business Plan Competition is the world’s largest and richest graduate-level business plan competition. It is hosted and organized by the Rice Alliance for Technology and Entrepreneurship along with the Jesse H. Jones Graduate School of Business at Rice University.

 

This is the 12th year for the competition. In that time, it has grown from nine teams competing for $10,000 in prize money in 2001, to 42 teams from around the world competing for more than $1.5 million in cash and prizes.

 

More than 130 corporate and private sponsors support the business plan competition. Venture capitalists and other investors from around the country volunteer their time to judge the competition, with the majority of the 250+ judges coming from the investment sector. One hundred and twenty-eight competitors have gone on to successfully launch their business and are still in business today, raising in excess of $460 million in funding and employ more than 1,000 people.
 

The Rice Alliance for Technology and Entrepreneurship (Rice Alliance) is Rice University’s nationally-recognized initiative devoted to the support of technology commercialization, entrepreneurship education, and the launch of technology companies.  It was formed as a strategic alliance of three schools: the George R. Brown School of Engineering, the Wiess School of Natural Sciences and the Jesse H. Jones Graduate School of Business.
 
Since inception in 1999, the Rice Alliance has hosted over 1,400 start-up companies at its programs which have raised more than $2.5 billion in early-stage capital.

 

About the Kauffman Foundation of Entrepreneurship 

The Ewing Marion Kauffman Foundation is a private nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare. Through its research and other initiatives, the Kauffman foundation aims to open young people’s eyes to the possibility of entrepreneurship, promote entrepreneurship education, raise awareness of entrepreneurship-friendly policies and find alternative pathways for the commercialization of new knowledge and technologies. 


 

Media Contacts: 

David Ruth

713-348-6327

david@rice.edu 

 

Mary Lynn Fernau

Phone: 713-348-5374

Email: mlfernau@rice.edu 

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