Entrepreneurs create business plans in competition

And the University of Hawai‘i is helping them.

Correnoz, Etherton and James are among more than 100 students and hopeful entrepreneurs on 39 teams entered in a new business plan competition created by the College of Business Administration.

The college formed a Center for Entrepreneurship and E-Business last year as a way to improve the value of the school, and combat economic stagnation by helping the state create its own future by fostering business creativity and risk-taking among students. One of the center’s initiatives is the business plan competition modeled after others at Mainland universities.

The contest, experts said, will help build entrepreneurial networks. It also could reverse the dearth of venture capital flowing into Hawai‘i by attracting investors who scout such programs for potential future darlings of Wall Street, like Akamai Technologies, a finalist in the 1999 Massachusetts Institute of Technology entrepreneurship competition. It might even launch a few million-dollar companies.

Some students have entered plans they were required to write for other classes. Some are entering businesses-in-the-making. Others are entering wild ideas. And a few are partnering with existing business owners who want to redirect growth. All are competing for $30,000 in prize money awarded for the three best plans.

Since the teams registered Feb. 1, they have been given instructional help, matched with coaches and listened to speakers on topics including "Entrepreneurship as a philosophy of life" and "Negotiating early-stage deals." Corporate executives, venture capitalists and Mainland professors of entrepreneurship began judging Friday following an on-campus ceremony.

Mark Gorenberg, a partner at the San Francisco-based venture capital firm Hummer Winblad Venture Partners who has judged several Mainland university business plan competitions, said the plans he’s reviewed in the past have been "as good or better than what we generally see when people approach us."

Could the next Akamai Technologies be among UH business plan entrants? Shirley Daniel, director of the Center for Entrepreneurship and E-Business, is optimistic that winners will be financed by venture capitalists and/or adopted by local business incubators.

"My goal — and this is probably pretty ambitious — is to have, over the next three years, 10 successful companies launched by this process," she said.

Daniel added that it could take a few more years to see if any companies that emerge from the competition go public. "This is just the beginning. I’m very hopeful."

The University of California at Berkeley started its business plan competition three years ago. In the first two years, winning teams raised $92 million in financing, according to the school. In the past 11 years, MIT’s competition led to the creation of more than 75 companies with an aggregate market capitalization of more than $10 billion, the school said.

The number of schools holding business plan competitions is increasing, according to Gorenberg, who estimates there are 30 to 40 Mainland universities running competitions this year. Participation in the programs is also generally expanding.

"The entrepreneur has kind of become the symbol of the hero at university campuses," he said.

In the last five years, the number of entries at MIT’s competition has grown from 52 to 206. Last year, UC Berkeley’s competition attracted 182 entries. The Wharton School of the University of Pennsylvania fielded 230 teams in its business plan competition last year.

Gorenberg’s venture capital firm went so far as to host its own competition last year, putting $5 million into the winning idea, Mydrugrep.com, one of 64 business plans considered from 100 initial entries by university students around the country.

Much of the growing popularity of the programs in the last few years has been because of the commercialization of the Internet. At Harvard, 40 of 50 entrants in its business plan competition in 1999 were related to the Web. Internet-related start-ups also have dominated entries at other competitions in the last few years.

That’s changing, however, because of the recent bursting of the dot-com bubble. In fact, the number of entries fell from 206 last year to 135 this year at MIT’s competition, largely because of fewer e-commerce ideas.

"We’ve seen a migration away from Internet, e-commerce and unknown business models," Gorenberg said. "Most of the plans are back to basics."

UH hopefuls

About half of the business plans entered in the UH competition are for e-commerce or information technology companies. A few involve agriculture or aquaculture. At least three are existing businesses with plans for a new growth strategy. At least two are nonprofit enterprises.

Correnoz, a 21-year-old graduate student from France who has been studying French and Spanish as well as teaching French at UH since August, had an ‘awa-inspired epiphany after one night at Hale Noa, an ‘awa bar in Kapahulu.

She thought the concept would do well in Europe because as far as she knows ‘awa bars don’t exist there. "We weren’t serious about it," she recalled. "We were kidding it’d be good to open a bar — blah, blah, blah."

Then on one following evening at the on-campus watering hole Manoa Gardens, Correnoz, who this time had imbibed beer, ran into a business school official who encouraged her to enter the business plan competition.

After further analysis, Correnoz settled on a business plan for a cafe franchise that sells wine, ‘awa, coffee, clothing and other products tied to Hawai‘i. "If we get good (judging) results, we might seriously think about (launching the business)," she said.

Etherton is a 34-year-old information security specialist for the Army. He’s earning an MBA in information technology and international business.

He said he entered his idea for administering network security because he had to write a business plan for another class. He added that he’s happy with his job. Still, he said: "There is a real need for the type of business we’re dreaming up. I figured I might as well look at some future business opportunities. If I can get in touch with the right people ... (who knows)."

James is a 24-year-old senior pursuing an undergraduate degree in economics. A longtime windsurfer from Maryland, he moved to Hawai‘i in 1998 and started kiteboarding a year ago. In September, James started working with a professor on a business plan to design high-performance boards here and make them in Europe or Southeast Asia.

"Hawai‘i is really ground zero for the kiteboarding industry, and is growing by leaps and bounds," he said.

Although he intends to begin selling boards in the next few weeks, James said the competition allowed him to improve his business model by learning from professionals under a mentoring portion of the entrepreneurship competition.

Professional help

About 70 mentors are working with UH business plan competition teams, one to three per team. Coaches include accountants, attorneys, consultants, entrepreneurs and executives of various Isle companies.

"I’ve almost been overwhelmed with how supportive they are," Daniel said. "It’s touching (that) the business community has really come forward with this much support."

Drake Beil, president of local management consulting firm Solutions Inc. is one of the coaches. "It was fun to help them take their idea and work with it to help (increase) business viability," said Beil, who earned his master’s and doctorate at UH. "(Students) have a little more ability to think out of the box. They don’t know that it’s not possible. They just try anyway."

Anthony Tjan, 30, knows the value of professional advice given to a student business plan competitor. For 14 years he tried to be a successful entrepreneur. With a little help from Harvard, he founded Zefer, a Boston-based company with 800 employees and revenue last year of $100 million.

Tjan, who had spent two years at New York-based strategic management consulting firm McKinsey & Co., entered Harvard Business School in 1996 with an idea for a strategy-led Internet consulting firm. Over the next two years he cultivated his vision under a mix of academic and real-life exercises at the university.

Tjan said professors and professional advisors were key to Zefer’s development by introducing him to the right people, including other team members, mentors and investors.

"The mentoring aspect is absolutely critical and helps you avoid making mistakes later on," he said. "You can’t underestimate the advantages to test ideas in a relative risk-free environment. More people are willing to help you out."

In 1998, Zefer won the school’s business plan competition and raised $2 million in financing. About a year later, Tjan’s company raised $100 million in private equity financing. Last week, Zefer, where Tjan is a director and executive vice president, raised $48 million more.

It’d be nice if a company the size of Zefer grew out of UH’s competition, but Beil said "it’s the process that counts."

Debra Guerin, managing director of the San Francisco-based venture capital firm International Venture Fund, said she’s looking forward to seeing what comes out of the UH competition, adding that the entrepreneurial environment and economic stimulation the program creates also is valuable.

"It’s part of the larger economic picture to grow business," she said.

Andrew Gomes can be reached by phone at 525-8065, or by e-mail at agomes@honoluluadvertiser.com

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