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
“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
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
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.
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
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
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.
Mary Lynn Fernau