Absolutely. I say your startup’s ready to compete for funding immediately because the process is extremely valuable trial-by-fire whether you get the cash or not!
Winning the funds will be great, but regardless, you’ll enjoy awesome networking opportunities, dig deeply into your idea/platform, learn a fair amount and start growing in ways most would-be entrepreneurs rarely experience…
…not your typical someone with a fabulous idea who talks a ton about it (passionately) but never really does anything with it.
Let’s start from the top.
Consider These Components
Funding Level: What kind of money are we talking about – enough to pay website hosting for a few years or $100k with a mentorship program tossed in? Obviously the higher the juice the more potent the demands; the fiercer the competition.
Time Investment: If you were to head to GrassHopper’s Startup Competition Guide and pick three at random, what would be the time investment to really compete? The higher the payout, again, the more you’ll have to commit and work for it.
Sponsors: First, do you want your brand connected to these sponsors, and if so, do you have the resources to jump through their “fine print” hoops?
Status: Are you thinking of applying to TechCrunch Disrupt or Web Summit? Are you ready or progressed and prepared enough to hobnob with these level of investors, insiders, media, famous people, etc.?
Deadlines: There’s only so many local, state, private (listed/advertised), and nonprofit startup competitions held each year. If you’re looking for quick funds, competitions likely aren’t a viable option.
Fees: Tons have no fees and are free to enter, while others charge.
Eligibility – Relative to Source
On the lower end, it’s typically just submitting paperwork. As you move up the food chain, it goes from smaller pitch-offs and lotteries to intense business plan competitions and year-long complex campaigns. Here’s three of the most common requirements.
Your product/service should be developed enough to execute within 2 years.
Should demonstrate the potential to make an impact in your chosen market.
Sweat Equity – be ready to market your idea, commit to working within the competition and with other organizations to develop your product and/or implement the service.
Where does a trepster or startup begin? Here, let’s break this complex subject up into 4 steps with a couple examples.
Step 1: Determine Needed Funding
Remember to temper your ambition with realism and vice versa. If this is your first time up to bat, look for competitions offering prize money equal to 10-30% of your funding needs. If that’s $15,000 then you can narrow the field a bit.
An example would be the New York StartUP! Business Plan Competition. Winners for 2017 were announced in September (3 months after deadline):
1st Prize $15,000: Tara Holloway, founder of social company All Things Fitness.
2nd Prize $10,000: Alexandria Carroll, for License to Drift (super-cool concept!).
3rd Prize $5,000: Noelle Minter for her local Bronx organization, 3rd Wind Network.
It’s for folks/businesses in Manhattan, The Bronx, or Staten Island, but if you’re curious about eligibility requirements, judges make their decision based on your business plan’s…
1) Content, including thoroughness and quality of analysis.
2) Effective use of business information and research.
3) Clear communication.
4) Effective use and impact of the prize money (see Step 2 below).
5) Ability to demonstrate probability of successful launch.
6) Shows community impact and job creation potential.
7) Quality and effectiveness during final presentation.
You can learn more through the New York Public Library. Point here is once you know what you need you can fine tune your approach.
Step 2: Create Detailed Funding Strat
While this may not be a requirement for many startup competitions, it’s highly recommended you create a professional, detailed plan of how you’ll invest these funds.
How have you been spending money on this idea?
Where EXACTLY will the prize money go? Even if it’s $500, if you have a specific plan of action or financial statement you dramatically increase your chances of winning over all the quick & dirty applications.
When will these funds impact your end-users or customers? Don’t be shy about both benefits and further challenges the money will help take a bite out of.
Why will the investments increase your startup’s potential for successfully launching and creating impact?
Personally, as a private investor I’d like to see some history of money generation so I can see how it’s been/being handled. It gives me an indication of how any money I decide to invest will be leveraged and what my ROI might be.
And being in the red isn’t necessarily a bad thing (to a degree). That’s the first place worth looking at to see how my network and I might turn things around.
Step 3: Crystallize Your Biz Plan
You likely understand the goal of a business plan, especially if you’ve ever applied for a small business loan or funding through a private investor. Even if you don’t have an Ivy League MBA there’s plenty of info through the net and countless startup resources to help you out.
And yes, financials are involved.
I’m actually a fan of LivePlan business planning software (no, I’m not an affiliate, just sayin). It helps fresh startups and inexperienced teams (as well as consultants/investors) not only document general concepts and ideas, but package and present (analyze) them in visually appealing ways.
Create a detailed, branded, easy to analyze and share one-page plan.
Hundreds of sample plans and templates for inspiration.
Step-by-step software help putting the pieces of a professional plan together.
Automated financials in good looking, easy to understand visuals/graphs/charts.
Sales forecasting, pitch optimization, easy export to PowerPoint and more.
Most importantly, well in my slightly OCD opinion, your ability to create fantastic looking presentations far beyond Excel, Word, or even PowerPoint is valuable. Whatever you use, get really specific with your business plan and you’re already ahead of the game whether you compete for funds or not.
Step 4: Modify Business Plan
Maybe you’ve already been in the market a few years and demonstrated both market need and verified potential for growth. An easy example would be, say, you’ve been selling an organic food base to local restaurants and catering companies in the area and are ready to expand.
Let’s say you apply to some startup competitions to get the funds needed to build out a better digital sales funnel, branding & marketing, more kitchen space, ecommerce, etc.
Modify your already existing business plan to be personalized for the competition!
Example: The Farm Bureau Rural Entrepreneurship Challenge
Okay, so you decide to weigh into this business competition and get acquainted with the American Farm Bureau Federation – both for the host of benefits (pitching opportunities, other funding access, networking, visibility, etc.) along with nice cash awards.
$10k if you land in the top 6 Best-in-Show winners.
$15k if you land in the final 4 teams and advance to last leg of the challenge.
$25k if you win the annual convention in Nashville.
You’re aiming for “Best Farm-to-Table Startup.” Great, make another copy of your business plan and customize it around this, what you’ll do with these funds, and the American Farm Bureau Federation.
You get the idea. That competition would be a huge undertaking, but you understand the value of curating your business plan to be specific to who you’re asking for funds.
Wondering who won in 2017? It was Grass Roots Farmers’ Cooperative. If you decide to check out their site, be sure to browse their content under the “Vision” tab in the navigation menu. It’s got everything spelled out aside from specific financial data.
They’re tailor-made for the Farm-to-Table-style competitions. Which competitions can your idea be tailor-made for?
First, you want to take into consideration the many aspects and red tape (strings) of competition and at what level. Then, a basic framework to approach with could be:
1) Establish how much money you’ll need to get off the ground within two years. Then compete for roughly 10-30% of that.
2) After narrowing the field, be sure your funding strat and business plan are finely tuned and professional-grade analysis.
3) Apply to 1-3 competitions with personalized business plans that you’ve researched and know you can logistically handle should you be chosen.
Hope this helps! If you have other tips to share, or think I’m completely off my rocker, feel free to leave a comment.
p.s. As I mentioned, I am a private startup investor and conducting a Startup Hunt in 2018. I’m searching for 10 new startups to invest $25k into. Interested? Submit Your Pitch!