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Angel Investors: Watch for Business Plan Competitions

I just finished three days as a judge for the Rice University million-dollar business plan competition, which was held at the Rice campus in Houston last Thursday through Saturday. If you’re an angel investor and you aren’t aware of business plan competitions, maybe you should be.

The finals were very impressive. As the six finalist companies went through their pitches, every single one was a very attractive investment. If you’re curious, look at NuMat Technologies, the winner. Then look at Medtric Biotech, Lemm Technologies, SolidEnergy, Solanux, and Salveo Vascular, ranked second through sixth, respectively. You’ll see nothing there but high-end technology, innovations, intellectual property, experienced management teams, very impressive resumes, and huge markets.

The Rice event is a magnet for local angel investors.

One group of prominent investors, which named itself the Goose Society for Grand Old Order of Successful Entrepreneurs, makes it’s six-figure investment the centerpiece of first prize. Its 10 members are a like a roll call of Texas successes including Bob Brockman, Rod Canion, Nancy Chang,Terry M. Giles, Jack M. Gill, Michael Holthouse, and others. It promises $150K investment but this year tripled that to offer the winner, Numat Technologies, $450K instead. Of course there’s a term sheet involved, but past winners talk of fair terms and very valuable later inputs.

Another group of 25 Houston angel investors adds $125K to the winner, although that too involves a term sheet. That’s named the OWL prize, after the Rice University Owl mascot.

Many of the 200 or so people (me included) who judge the final 3-day event are accredited angel investors. They judge various phases including an initial round, semifinals, a consolation round for teams that didn’t make the semi-finals, and the finals.

And there’s no question that a lot of this judging — which is about reading plans, sitting for pitches, and asking questions — lead to successful angel investment deals. The chart I added here is from the Rice event’s success story page, and it shows funding deals in millions of dollars, by year, for teams that competed in the Rice contest.

What does this mean for you? Watch for these contests. I’ve attended events like this in Portland OR, Houston, Austin TX, San Francisco, and New York. Every year, the companies that compete get more real and more attractive, on average, to angel investment.

 

Written by Tim Berry

user Tim Berry

Tim is the founder of Palo Alto Software and bplans.com, the co-founder of Borland International, and the official business planning coach at Entrepreneur.com. He has been called the "Obi-wan Kenobe of business planning" and "The Father of Business Planning." He is a serial author of books and software on business planning.

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