Online connections give entrepreneurs access to a global network of founders, mentors and advisors.
By Lesa Mitchell (Vice President, Kauffman Foundation)
In 1950, Ewing Kauffman launched his pharmaceutical company, Marion Laboratories Inc., in the basement of his modest home in Kansas City. During his first year in business, he had sales of $36,000 and a net profit of $1,000. By the time he sold his company to Merrell Dow in 1989, it had become a global diversified healthcare giant with nearly $1 billion in sales.
In 1976, Steve Jobs and Steve Wozniak launched Apple. The first world headquarters for their world-changing venture was Jobs’ family garage. At the end of its fiscal third quarter this year, Apple reported quarterly revenue of $35.0 billion and quarterly net profits of $8.8 billion.
When these visionaries started their companies, “networking” and the entrepreneurial ecosystem as we know it didn’t exist. Their success stemmed from old-school networking, such as knocking on doors and getting strategic introductions through acquaintances, as well as innovative thinking and energetic determination – all still important.
However, today’s founders now enjoy an advantage Mr. Kauffman didn’t dream of, an advantage the Apple team helped to create: Strategic online connections that give entrepreneurs fast and easy access to a global network of founders, mentors and advisors.
Business is a competition
Once entrepreneurs have a business idea, networks are the most important tools they have for starting and growing their companies. That’s always been the case. However, the way today’s entrepreneurs network has evolved with of the advent of technologies that put resources such as business plan competitions and startup communities at everyone’s finger tips – literally.
This is what we call the “democratization of entrepreneurship.” These online innovations are helping to define the next generation of networking.
The competition concept took off in 1989, when the Massachusetts Institute of Technology launched the MIT $100K Entrepreneurship Competition. Since then, business plan competitions have grown in popularity, prestige and power.
This past April, students from 42 universities competed for more than $1.5 million in prizes in the Rice Business Plan Competition (RBPC), recognized as the “largest and richest graduate intercollegiate business plan competition in the world.”
Compiled numbers, spelled out in a just-released report on the Entrepreneurial Impact of the RBPC from 2001-2011, demonstrate the value of the competition. For example:
- During the first 12 years of the RBPC, there were 354 total competitors and 199 startup companies launched; 64% of those companies have gone on to be successful – the companies are either still in business or achieved a successful exit.
- More than $460 million has been raised by RBPC alumni companies in early-stage funding.
- Based on their university locale, RBPC competitors from 2001-2011 have come from 35 states and 12 nations.
The Rice report also notes that more than half of the 250 judges who participated in the 2012 RBPC were investors, creating a tremendous networking opportunity for the entrepreneurs. Gaining access to investors, mentors and advisors for early-stage companies isn’t easy. Maintaining it after a competition can be the real challenge. Online networking can help keep the doors open and communication flowing.
Moving from competition to connection
Business plan competitions give aspiring entrepreneurs access to experienced resources, networks and capital. But there was no one-stop place that took the competitor to the next level – networking. That’s why we at Kauffman started iStart. iStart is a global online resource for business competitions that also provides a place for aspiring and early-stage entrepreneurs to build a network of resources, get constructive feedback and connect with potential partners.
The approach is simple; the possibilities, unlimited. Anyone with an interest in playing some role in the launch of an innovative business – whether it’s to join, fund, mentor or advise – can scan thousands of business concepts that cover everything from Internet startups to consumer goods and green innovations.
Aspiring entrepreneurs from around the world – some who have won at competitions, others who haven’t – have shared more than 8,000 business ideas and plans on iStart so far, and we expect that number to proliferate exponentially.
In addition to sharing business ideas, iStart enables early-stage companies to highlight what they need to start or grow, such as potential partners, marketing analysis and legal help. Mentors, advisors, funders and corporate venture directors who are on the hunt for innovations to adopt have a quick and easy way to tap into these rich ideas and plans – many of which have been vetted through business plan competitions.
Networking – online or face-to-face – is as essential to entrepreneurship as an innovative business model. This is not new. Ewing Kauffman tapped into the connections he made as a pharmaceutical salesman when he launched his first business. Steve Jobs and Steve Wozniak were longtime friends before they got to work in that garage.
The new generation of entrepreneurs now can capitalize on the next generation of networking – on a global and almost immediate scale thanks to technology. It will be fascinating to see what they do with it.
This post was originally posted at Forbes.
About the guest blogger: Lesa Mitchell is a Vice President at the Kauffman Foundation. She has been responsible for the Foundation’s frontier work in understanding the policy levers that influence the advancement of innovation from universities into the commercial market and the new relationships between disease philanthropy and for profit companies. Prior to joining Kauffman, Mitchell spent twenty years in global executive roles at Aventis, Quintiles, and Marion Laboratories. Follow her on Twitter at @lesamitchell.