Tuesday, May 7, 2013

Business Plan Competition

Note! Our team has changed names to DynaGlass after some mentor feedback about our previous name. 

This year, I was asked to assist with the Georgia Tech Business Plan Competition (BPC). My TI:GER team decided not to enter due to our length of time to commercialization but I still wanted to be involved. Time keeping at the BPC was an amazing experience and hearing the wide variety of pitches and
judges’ comments helped mold our TI:GER team’s commercialization plan presentation. 
There were several traps that teams fell into most frequently:
  1. Many teams focused too much on their valuation. They provided detailed pro formas for 5-10 years out and explained all of their assumptions. This took a long time and in a time-constrained presentation format, this can be dangerous. The judges did not seem to take these pro formas very seriously because they were so far out and many of these teams had failed to make a single initial sale. What these slides did do was invite questions from the judges that were often difficult for the teams to answer which leads to trap number 2.
  2.  There were several attempts during Q&A for teams to answer questions about assumptions that were simple guesses. These assumptions were often difficult to find accurate numbers around and thus the teams would simply estimate or make up a number to make their financials work. When the judges would question these assumptions, teams would often just “make-up” a justification. This was fairly obvious to the judges and they would harp on that point until the team finally admitted they didn't have a reason. It’s always better to admit you don’t know the answer than to make one up.
  3. Teams often did a poor job explaining their technology in appropriate detail and language. Some teams used highly technical language and went into great detail on how, exactly, their product worked. In contrast, there were teams that glossed over their product and focused entirely on their business model. The judges wanted a detailed description that they could understand. Even if they do not understand all the science, it needs to be presented in a relatable way. Without a detailed description of how the product works, it makes the project seem less developed. The question then must be asked “why you?” if you do not have a specific way of solving the problem.

4. Pricing seemed to be fairly random and the judges wanted to see value based pricing. While value creation is often difficult to quantify, most other pricing models were perceived as being more “random”. The teams that were able to determine and demonstrate the value they were providing their customers generally performed better than those that offered vague “savings”.

These four key lessons provided great insight into what judges at business plan competitions are looking for and common mistakes teams make. Often teams seemed so involved in communicating the value of their idea, they forgot to communicate the value of the product that their company was selling. All companies are driven by sales and these judges seemed to take a simplistic view of start-ups. If you’re selling a product that offers greater value to the customer than it costs you to make it, you have a good chance of being successful. For DynaGlass, we need to really focus on the large value we are providing the customers and quantify that value as much as possible. That way our team will be able to overcome the relatively high price of our product. We also need to come up with justifications (written and sourced) for each of our assumptions and be quick to admit what we don’t know (but will find out) during our Q&A sessions.