Winning a startup competition often brings in more than mere recognition: The spoils of victory can include prize money and investment capital, introductions to venture capitalists and potential partners, public relations support, training and mentoring, and other perks that can help boost a nascent business.
But the competition is usually fierce. How do you impress the judges?
“Companies typically get judged on a small number of important dimensions, usually market potential, product and technology, differentiation and competition, traction, and team,” says Deborah Magid, director of software strategy for IBM’s Venture Capital Group, which oversees SmartCamps. “This is true at business plan competitions, but also in private meetings with investors, potential partners, and clients.”
The Intuit Small Business Blog recently asked Magid to share her insights into what competition judges typically look for in a winning startup. Much of her advice can benefit firms at all stages, particularly those engaged in activities such as venture capital pitches, business development, and partnerships.
1. “Build the best company you can.” No matter how much lipstick you put on that proverbial pig, it rarely wins a startup contest. The competition isn’t worth your time, money, and effort if your business simply isn’t ready. The same holds true for related endeavors, such as venture capital pitches and potential partnerships. “Both investors and potential partners want to know that you plan to build a large, successful business,” Magid notes.
2. “Don’t build to be sold. Build to be bought.” Plenty of entrepreneurs set out with an eye toward selling their business down the road. That’s fine, as long as it’s not your only goal. “If you are doing a pitch, don’t list potential acquirers, because that implies you are too focused on selling the company instead of thinking about your clients and growing the business,” Magid recommends.
3. “Form strategic alliances.” Entrepreneurs and business owners often have an independent streak. That often serves them very well, but not always. “Don’t try to go into the market alone,” Magid says. “Even large companies like IBM go into the market with all sorts of partners, from startups to large corporations.”
4. “Hire the best people you possibly can.” When startup competition judges pick winners, they’re picking people as much as they’re picking businesses and ideas. Your people need to be top-notch to stand up to the glare of the spotlight. “Companies get judged on their teams, and you need to have the best team in the world for your business,” Magid says.
5. “Put the customer above all else.” In the startup competition context, this isn’t a customer-service mantra. Rather, it’s a reminder that you need to prove that your target market actually exists. “Understand your market and your customers,” Magid advises. “Even before you ship a product, you must test your assumptions with potential clients and know that there is a real market for what you are building.”
6. “Tell the story!” It might sound strange, but too many startups simply don’t do a good job of explaining what they do or what product or service they provide. That’s a red flag for competition judges, not to mention investors and other potential stakeholders. “When you describe your business, a common mistake is to spend too much time on the problem space and not enough time saying what you actually do,” Magid explains. “If you are targeting the right market, your audience most likely already understands the problem, but they don’t know what you do. Customer scenarios — even hypothetical ones — are always very helpful.”
7. “Don’t underestimate the competition.” A common mistake, according to Magid, is to insist that your business is so unique, so innovative, so new, that it has no competitors. “Never say you have none because it is never true,” she says. “If you say there is no competition, your audience will assume that you don’t understand your market or your clients.”