Young entrepreneurs hit cash wall

By Andrew Gomes
Advertiser Staff Writer

Monte Littlefield learned just how fast he could burn through $15,000, and how hard it is to raise a million bucks to turn a business idea into an operating company despite ringing endorsements from Hawai'i business leaders.

A team from UH plans a biodegradable fishing net that would replace synthetic netting such as the one that Ikaika Kincaid, center, is holding and discussing with Jon Winsley, David Nickles, professor Jian Yu and Carlene Chun, from left. Deborah Booker • The Honolulu Advertiser

"It's not dead yet, but ... frankly it doesn't look promising right now," said Littlefield, a retired Army officer and University of Hawai'i graduate student who last year led a team that won the school's first business plan competition created by the College of Business Administration's Pacific Asian Center for Entrepreneurship and E-Business.

"Coming out of the business plan competition, I was sure we were going to get financed," he said. Instead, Littlefield recently took a job with strategy and technology consulting firm Booz-Allen & Hamilton Inc. in Honolulu while maintaining some hope that he will still be able to realize his team's rice-straw dream.

Not exactly an inspiring success story, Littlefield's experience exemplifies the tough reality facing this year's crop of UH business plan contestants who dream that they might hit the next home-run as a business startup even when the venture capital boom is over.

The second annual UH business plan competition has produced a field of 138 participants on 45 teams — up from 100 participants on 39 teams last year — vying for a share of $50,000 in prize money and a chance to attract financing from venture capitalists interested in betting on the next potential Wall Street darling.

Team members include students, professors and business executives who have entered plans they expect will become businesses, plans for redirecting an existing company or plans they are writing for other classes or just the experience.

The contest, which includes coaching by business professionals and academic instruction, is one initiative of the college's 2-year-old Center for Entrepreneurship and E-Business to foster business creativity and risk-taking among students, which the university hopes will foster entrepreneurial networks, attract investors to the state and benefit the economy.

The competition is modeled after others at Mainland universities that have spawned hundreds of companies into which investors have poured billions of dollars.

Shirley Daniel, acting director of the center for its first two years, last year set a "pretty ambitious" goal of 10 successful companies launched through the competition in its first three years.

Entries this year range from a plan to duplicate the success of the Barbie Doll, to a virtual taxi dispatch company to a maker of custom-designed golf clubs for children.

With more entrants this year and nearly double the prize money available to help activate business plans, the odds are better for reaching Daniel's goal.

This year, the competition also has a new leader in Rob Robinson, a former Harvard Business School professor and an authority on early-stage investment financing for startup companies.

Turning out a few companies would be nice, he noted, but Robinson said it should be clear that the business plan competition is foremost a learning opportunity for students. "That's our primary objective," he said.

Still, Albert Y.C. Lee has every intention of acting on his business plan after he earns his MBA in July and completes an internship in China.

Lee, who said he has nine years of experience in investment banking in Hong Kong, Taiwan and Europe, is developing a business model to lure institutional investors to China by creating an easier way for them to take profits.

David Ninomiya, a fourth-year undergraduate majoring in finance and management information systems, also thinks his idea has potential. Ninomiya and his team propose an online system for students to buy and sell textbooks to each other.

The idea came to him on the first day of classes at UH. "Getting ripped off by the bookstore — that's how it started," he said.

Ikaika Kincaid, a 1998 UH grad with a geology and geophysics degree, will take a shot at creating a biodegradable fishing net by strengthening a synthetic fiber patented by a UH professor advising Kincaid's team.

Kincaid, who grew up in Kailua where nets routinely wash ashore, said he wants to license technology for making the product to companies in what he said is a $400-million-a-year fishing net manufacturing industry.

"The business plan competition kind of kicked us in the 'okole to go do it," he said. "If we do make the top three, we're hoping to take that (prize) money and pursue (starting the business)."

Competition organizers hope this year's winners, to be determined in May, will all take their plans to the next level.

Last year, the third-place team didn't pursue its business plan for developing backbone optical network software, while the second place winners ran into legal problems with their tele-medicine idea, according to competition program manager Keala Monaco.

But Littlefield, who got the furthest, said the competition, mentoring and financing effort was invaluable. "I felt like I got another master's degree," he said. "Even though we didn't get funding, I wouldn't trade (the experience) for the world."