Along with the rise of a startup culture, a question has emerged, which is also relevant for all other areas of human activities: where to get money from? This question is almost as monumental as the search for the meaning of life, and therefore it always remain on the top of the agenda. Unlike the latter one thought the answer to the former question is still possible to find.
All startups should have already learnt by heart a classic formula of three F’s (family-friends-fools), but the next stage of finding sources is much more difficult. There are already tones of articles and books written on the ways to attract investments. A short list includes the following items: grants, business angels, business incubators (or business accelerators), venture capital funds, strategic investors and crowdfunding.
One of the most effective mechanisms for attracting the attention of several investors at one time is to participate in start-up projects competitions. Held in different formats and under the auspices of various organizations such competitions serve as platforms that brings together startups, investors and experts.
The ones who most actively seek and encourage the start-up projects in various spheres are innovation centers. In the United States the most prominent innovation center is MIT, in Finland it’s SLUSH, Russia it’s Skolkovo Foundation.
There are also “specialized” platforms for startups. The most widely represented competitions for new innovative companies are in the digital area. Tech Crunch Disrupt competition annually attract digital startups from around the world. Another large competition in the field of Internet technologies LeWeb Conference, an annual gathering of about 4,000 entrepreneurs, investors, bloggers and journalists.
However other science-based startups have much less options. The petrochemicals startups for the first got an opportunity to present their projects to investors and industry leaders in November 2016. In order to support the most promising projects in the field of petrochemicals and gas processing the world leading companies in that field created a platform for startups on the basis of IQ-CHem contest. A main distinctive feature of the competition is that participants have a unique opportunity to present their projects not only to one but to several companies, which greatly improves the chances of finding support for their ideas. In turn, companies, including SIBUR, The Dow Chemical Company, DuPont, Solvay, 3M, AkzoNobel, BASF, LG Chem, Henkel, Linde, Skolkovo, Technip and Honeywell UOP, get an opportunity to strengthen their innovative capacity through open innovations.
A competition organized by large businesses are more profitable than the other formats as apart from finding a funding source for their project participants can also find a partner for cooperation. This aspect is particularly important for science-based start-ups for whom it’s extremely difficult to independently enter the market and, therefore, to convince investors in the financial prospects of their ideas. Participants to IQ-CHem contest will have the opportunity to present their projects to 10 companies developing their businesses worldwide at one time.
It should be noted that participation in startups competitions has other benefits, in addition to finding an investor and a business-partner:
Self Evaluation opportunities:
First of all, participation in a competition is an additional incentive for startups to structure their work at the stage of submission of application. The need to comply with strict rules and deadlines allows to analyze the work already done and to reveal strong and weak points of the project. Furthermore, most competitions involve mentoring sessions, meetings with experts and experienced entrepreneurs, during which the startups can be advised on how to improve their business models. In the course of a competition startup teams also meet and share experiences with colleagues working in the same field.
Another important point is the PR-component of the contest. It makes possible to forget for some time about the painful hours before the monitor waiting for the feedback from Mike Butcher on your press-release. If you manage to win the competition Mike Butcher himself will plead you to give him an interview (well… may be). At least, media partners and the organizers of the contest themselves will write about your project. And what is the most important you’ll bring yourselves to the investors’ sight who make up the jury of any competition.
Participation in the competition will be an additional incentive for team-building, while the victory will strengthen your self-confidence, which is important in the early stages of the project, when the prospects are still vague and the risks great.
Pinterest, one of largest social networks, whose market value is estimated at more than 11 billion US dollars, began its route to success at the NYU business projects’ contest.
Akamai Technologies, provider of services for the acceleration of Web sites with a market value of 11.46 billion US dollars, found its investors through MIT competition. Other alumni of this competition include such successful companies as Harmonix, Silicon Spice, and others.
In August 2016 the winner of startups TechCrunch Disrupt NY 2016, Beam Company which provides support for video games broadcast was acquired by Microsoft and is continuing its activities in the part of the corporation.
Image : © Raimond Spekking