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Forming a good team for the annual Edward L. Kaplan New Venture Challenge (NVC) www.chicagonvc.com business plan competition requires finding people with unique skill sets who work well together and can commit a substantial amount of time to the project, said Eric Bielke, ’08, founder and vice president of finance for SoCore Energy http://www.socoreenergy.com/.
“Energy and dedication can be easy to come by,” Bielke said. “You need to find people who have time and who you can work with. Ideally, work with people you’ve known for a while who have complementary skill sets. On our team, each of us was able to bring something different to the table and essentially work full time on the business and part time as students.”
Bielke, whose SoCore team won third place and a $10,000 cash prize in the 2008 New Venture Challenge, shared his experience in the competition and business during a panel discussion sponsored by the student-led Private Equity, Entrepreneurial Ventures, and Private Equity Club and the Polsky Center for Entrepreneurship at Gleacher Center on January 16.
Bryan Johnson, ‘07 (XP-76), founder and CEO of Braintree Payment Solutions which won $25,000 as the 2007 NVC winner, said he explained from the start that during the competition his teammates would not gain equity in the business he had bootstrapped to that point.
Moderator Linda Darragh, adjunct associate professor of entrepreneurship and NVC coach, said she recommends teams defer equity decisions, as both Braintree and SoCore did. “I think there are other camps around here, but I personally like the idea of deferring, or at least setting out, ‘Here’s how we’re going to value in the future,’” Darragh said. “Some teams do matrices showing how each part of the business contributes and how that changes each year.”
“SoCore and Braintree utilized Chicago Booth faculty, who were invaluable during preparation for the competition, Bielke and Johnson said .
“They were excellent,” Johnson said. “They gave us all the time we wanted. We met with them on the phone and in their offices, and talked about everything from our presentation to our business plan – really A-Z. After the competition, quite a few people helped us. We received a lot of good will from the judges as well.”
SoCore leveraged the experience of its initial investor and Booth faculty, Bielke said. Travis Bradford, adjunct professor management, later joined as an advisor to offer his unique expertise in solar energy, Bielke said.
“In eventually building your board, you need to think about people who can, with limited time, add a lot of value,” he said. “It may not necessarily be technical expertise or knowledge, but it may be in contacts. You want to find people who are well placed, especially well placed in the industry you are selling into.”
To prepare their business plans, Bielke and Johnson said they focused on “keeping it simple.” Johnson said he read an article on the elements of an elevator pitch written by Waverly Deutsch (fac/waverly.deutsch), clinical professor of entrepreneurship. “In the competition, you have 15 minutes to educate on your industry and your product, to explain your value proposition, and to convey there is a high probability of success,” he said.
“Show there is potential for hockey-stick-like (revenue graph) growth. That’s always the first thing a venture investor will look at,” Bielke said. “You also need to demonstrate your particular competence to do this particular business,” he said. “Design a business plan that really leverages you as an expert.”
The panel successfully conveyed the importance of selling business ideas on two levels, said Utku Kafal, ’08. “One is selling your idea to the investors as a startup and the other is finding and then selling your business to customers,” Kafal said. “They talked a lot about cold calls versus pull marketing, such as blogging. How do you make your customers aware of your services and what you’re about? If you have a hit ratio in your blogging, then customers can find you when they Google you.”
The NVC is a year-long academic process where students from Chicago Booth’s full-time, part-time, and executive education programs in Chicago, London, and Singapore turn their entrepreneurial ideas into reality. Now in its thirteenth year, the NVC has awarded more than $500,000 to help launch 45 companies, which have gone on to raise more than $100 million in equity capital.
— Phil Rockrohr