“Eight Great” Business Plans: Which One Gets the Money?Published: May 24, 2000 in Knowledge@Emory
You be the judge.
On May 1, eight finalists in Wharton’s second annual business plan competition told a panel of seven judges in 10 minutes or less why their business plan deserved to win the first place prize of $25,000.
The "Great Eight" were culled from 226 student teams in a winnowing-down process that began last October. Although students’ ventures were heavily weighted toward the Internet – seven of the eight finalists were in fact e-commerce or Internet-based businesses - their ideas covered a range of industries, from IT, communications, media and entertainment, services and biotechnology to retail, consumer products, distribution and non-profit.
The judges included venture capitalists, entrepreneurs and investment bankers. Their questions to the presenters covered such areas as: How would you spend seed money? How did you decide on your pricing strategy? Who are your competitors? What is your exit strategy? How will you achieve critical mass in this market? Do you have strategic partners? What are your plans for alliances? What is your average transaction size? How do you see your role in the company three years from now?
After the "Eight Great" presentations, but before the judge’s decisions were announced, an informal poll (by this writer) of attendees at the presentation revealed a total lack of consensus as to who should get first prize, second prize ($15,000 to the best e-commerce venture) or third prize ($10,000). None of those polled correctly identified the winner.
You might have better luck. Below we offer brief summaries of the eight finalists and then announce the judges’ decision. We conclude with very brief mentions of the competition’s semifinalists.
One final note: Don’t be hard on yourself if you don’t pick the winners. It could be that you did, but don’t know it. RadioXchange, the concept awarded first place by the judges in last year’s competition, never got off the ground. PayMyBills.com, a 1999 entrant that didn’t win any awards, today has 125 employees, a 25,000-square-foot office in Pasadena, and tens of thousands of customers. The company recently landed a $30 million round of financing with online brokerage E*Trade as the lead investor.
The Great Eight:
- Slingshot Solutions: The company addresses the problem of e-commerce returns and the money lost in returns processing. The business team’s description says it "uses proprietary dynamic couponing and rebating technology to add surplus through returns transactions. Our strategy is to partner with manufacturers and e-tailers to facilitate logistics and better manage customer relationships. Our target markets are consumer products with predictable rates of return and rapid value decay. We handle the product through outsourcing relationships with third-party logistics centers. We operate in a very new space, where competition has recently arisen, but where none dominate the market or provide the unique value proposition we offer."
- Instaward.com: The company offers a "B2B e-commerce solution that will enable managers and small business owners to manage, via the Internet, their employee recognition and reward programs. The Instaward solution aims to revolutionize the business process and the economics of the $24 billion market for non-cash merchandise and travel incentives ... Managers will be able to award their employees, with the touch of a button, with an Instaward ’stored-value’ spending account that can be used to shop at any online merchant. Because award recipients are armed with funds that must be spent online, they represent ’captive online buyers’ that can be used by Instaward.com to generate substantial revenues."
- NovaEx.com, Inc: "We are an online, B2B dynamic pricing exchange for natural products. We are the emerging leader in B2B e-commerce in the $30 billion global natural products market, which includes trading for nutraceuticals, herbal drugs, herbal extracts, dietary supplements, natural foods, natural personal care products, and all the raw materials and intermediates involved in their manufacturing. NovaEx provides the fragmented industry with a secure, dynamic, online auction solution to broaden customers’ market reach, increase product liquidity and improve B2B transaction efficiency and customer profitability. Our revenues come mainly from commissions, service charges, storefront fees, market data sales, advertising and consulting fees."
- Digipad, also called Patient Interview Software for Physicians: The company produces "patient interview software, which is supplied to doctors via wireless Internet Web tablets, or any other Internet connection. The patient interview software contains a proprietary interview methodology to efficiently capture patient information and produce a sophisticated medical note for the physician." The company has already developed a prototype for the medical specialty of ear, nose and throat surgery. Advertising of the product, called the Digi-Pad System, will be conducted in physician journals and on physician-oriented web sites. Fee-based licensing agreements will be pursued.
- Globex Pharmaceuticals: "GP will meet the U.S. pharmaceutical industry’s need for high quality, inexpensive chemical intermediate and bulk pharmaceutical products by selling products from licensed factories in India. GP will not own manufacturing facilities; it will outsource this work to licensed Indian manufacturing facilities that can produce high quality product at a lower cost than U.S. or European plants. This business model will minimize GP’s operating risk, keep costs low and allow GP to remain flexible as the market changes." The pharmaceutical outsourced manufacturing market size, $16.7 billion in 1997, is expected to grow to $20.4 billion this year.
- DealMaven, LLC: The company’s mission is to "provide corporations and professionals engaged in or contemplating corporate finance transactions with the information, tools and relationships needed to evaluate and execute corporate finance transactions. To support this vision, the company is currently developing applications that help deal makers understand, analyze and execute transactions. Two of our four products are nearing completion and we have begun meeting with key investment banks to discuss their implementation. Our marketing strategy is simple: We intend to leverage existing relationships. Our founders have strong ties with most bulge-bracket investment banks, which are the decision leaders in the corporate finance industry."
- TexDirect.com: TexDirect is a "full service online textile exchange that brings buyers and suppliers from around the world together, facilitates their transactions, creates information transparency, reduces costs and enhances efficiency within the value chain ... The textile industry is an $800 billion industry of which $150 billion is traded internationally. There are significant sourcing costs and information inefficiencies created by the fragmentation of key players in the value chain. TexDirect will partner buyers and suppliers with minimal sourcing costs, create information transparency throughout the value chain and appropriate a portion of the total revenue generated by textile transactions."
- eTechtransfer.com: The company is a "global B2B marketplace for technology transfer in the life sciences industry ... Our B2B e-commerce solution will enhance the process by which companies license patents. By creating a fully integrated web site, we plan not only to simplify the cumbersome matching process between the licenser and licensee by uniting buyers and sellers on one common site, but also to shorten the entire licensing period from months to weeks. For the seller, eTechtransfer.com will provide the opportunity to license patents at the highest premium. For the buyer, we will provide a fast and efficient one-stop-shop that offers the highest quality patents available for licensing in the life sciences industry."
And the winner is … by unanimous vote … eTechtransfer.com. NovaEx.com won second place; Digipad came in third.
"One of the judges came up after the winners were announced and said they thought that our group was able to demonstrate the idea of teamwork as opposed to just presenting a concept," said Yujiro Hata, the eTechtransfer.com team leader and a first-year MBA student at Wharton. "It impressed them that we had worked together for a long time, that we had developed a team dynamic … Six of us were together when we started the project in November, and already we have some seed money and are in the process of closing two additional investments." ETechtransfer.com, which has registered companies like Abbott Laboratories and Celera Genomics, now has nine managers and plans to open an office in Philadelphia this month.
"We are here because of the ability of our team to incorporate everyone’s skills," Hata added. "That was the hardest part, finding the right people and the most effective way to motivate them. One of the first things someone told me about this process was that your goal should be not to think about raising money or building a business model, but going out and finding individuals who believe in the idea more than you do. If you surround yourself with these people the rest will fall into place."
Below are summaries of semi-finalists in the business plan competition:
- Automated MediImage Analysis: provides fully automated medical image analysis services for clinical trials, pre-clinical research and radiological imaging for patient care.
- Bizclaim: creates an Internet marketplace where vendors can competitively bid referral jobs from insurance companies; focuses on auto glass claims.
- CollegeShopper: a student focused consumer direct service provider. Targets colleges and university students using a business model designed to deliver the goods and services during the extremely limited times that students have free.
- CyberTrak Systems, Inc: a computer security company that provides data recovery, hardware tracking and asset management solutions for personal computers, PDAs and cellular telephones to individual consumers, businesses, and government and academic institutions.
- Embody Lingerie: manufactures and markets lingerie to the well-endowed woman using the Internet as their primary distribution channel.
- EZ-Movers.com: a web transaction enabler between homeowners and movers.
- HowIsMyChild.com: applies the current Internet technology to the traditional day care industry in a non-traditional manner. Provides real time video of children in day care centers via the Internet.
- Market Buster: finds the cheapest prices around. Designed with the intent of saving people time and money, while paying for itself.
- NetConversions: provides as ASP solution that offers real-time dynamic promotions designed to increase conversion rates through leading-edge behavior profiling methods.
- SoHoStyle: an innovative web-based marketplace for designer apparel, sports goods, accessories and home products.
- Tel-e-Market.com: a B2B eMarketplace for call center capacity. Allows call centers with excess capacity and buyers who need to run telemarketing or market research campaigns to come together and conduct business.
- Uplay4it: a proprietary, patent-pending Internet advertising and entertainment model that is the next step in the evolution of Internet advertising and permission marketing.
- Valynx: a service company that develops mobile Internet applications for consumers and small businesses.
- Vertical Metrics: provides value-added tools for buyers and sellers on Internet-based business-to-business exchanges.
ViroChip: plans to develop a hand-held blood analyzer system to perform rapid, reliable, on-the-spot analysis of blood samples for the seven most commonly tested-for pathogens.