Oct 3, 2013
The end of the spring semester at MIT heralded the close of another year of business plan competitions. In the wake of an exciting conclusion to the Clean Energy Prize (CEP), the $100K Entrepreneurship Competition ($100K), and the IDEAS Global Challenge, and looking ahead to the start of a fresh cycle, I thought I would follow-up with a few business plan competition alumni to get a glimpse of where they are now, uncovering what paths they’ve each followed to move from the competition stage to a full-fledged enterprise. I had the chance to catch up with David Auerbach of Sanergy, William Sanchez of CoolChip, Nadia Shalaby of Arctic Sand, and Vanessa Green of FINSix. They lent me their time and their thoughts on the role played by the university infrastructure and business plan competitions in helping them build the businesses they lead today.
Meet the companies…
First, here’s a quick introduction to each of the companies and entrepreneurs:
Sanergy participated in the 2011 $100K Business Plan Contest and won the Grand Prize with their plan to recover human waste for fertilizer and energy production. David Auerbach was one of the original founders of the Sanergy team and is Sanergy’s CEO.
CoolChip commercialized heat sink technology that offers the possibility of lowering cooling requirements and costs for large data centers, and won the 2011 CEP. William Sanchez is the CEO and a co-founder of CoolChip.
Arctic Sand also competed in the 2011 CEP, proposing a DC-to-DC power convertor technology with reduced thermal losses. Nadia Shalaby is the company’s founder and CEO.
FINSix took third place in the 2010 $100K Products and Services category with their concept of a high switching frequency power convertor for consumer electronics (the company was known at the time as OnChip Power). Vanessa Green is a co-founder of FINSix and the company’s CEO.
Before any of these teams were ready for competition, MIT courses provided valuable spawning grounds for the new ventures. FINSix, CoolChip, Arctic Sand, and Sanergy found their beginnings in the classroom. FINSix developed from a project for 15.390 – New Enterprises, and CoolChip was formed as part of a project for 15.366 – Energy Ventures. The I-Teams course – 15.371 was where the Arctic Sands team was formed, and the course was a valuable place for the team to foster relationships with mentors. Sanergy grew from an idea in 15.375, or D-Lab, the Development Ventures action lab course. The courses effectively brought together individuals with similar interests and complementary abilities to form teams to pursue an idea. Class projects laid the foundations for what would become competitive business plans.
A trove of resources…
When the teams entered the competition arena, they gained access to a host of resources – mentors, publicity, practice developing and pitching ideas – that have proven instrumental to their development since leaving MIT.
For Sanergy, the MIT $100K provided instrumental resources – not once, but twice. The first time Sanergy competed in the $100K, in 2010, the founding team met and cultivated relationships with individuals who offered help and guidance to launch the company. This included introductions to a team of attorneys and to mentors such as Matt Forpy, founder of the One Acre Fund in Kenya. The second time, the reward was a bit more tangible – a check for $120,000 for the $100K Grand Prize and audience choice award. The competitions also gave the Sanergy team an opportunity to learn what investors look for in pitches and allowed the team to practice pitching to prospective investors. This equipped the team to interact successfully with investors and partners upon launching operations.
According to William Sanchez of CoolChip, “the [MIT CEP] was helpful in allowing us to meet industry partners, customers, and investors. [It] provided visibility, a framework for building a business plan and conducting early market research, access to mentors, and high-quality networking opportunities.”
Vanessa Green further emphasizes that the $100K competition forced the FINSix team to think about questions, challenges, and issues that companies at an early stage of technology development might otherwise overlook. Through interactions with the ecosystem of competition judges, mentors, and organizers, teams were pushed to formalize ideas, respond to feedback, and consider what it takes to turn an idea into a functional enterprise.
The teams I caught up with utilized other resources on the MIT campus such as the Venture Mentoring Service (VMS). Nadia Shalaby of Arctic Sand summarizes the role of the university’s infrastructure in enterprise development as follows: “The university environment in which Arctic Sand was conceived, as well as the access to all these competitions, is an excellent vehicle for startups to get both experience and publicity. Having the support of MIT’s Technology Licensing Office, MIT faculty, the MIT Entrepreneurship Center, MIT students, VMS, as well as other members of the MIT community was absolutely critical for Arctic Sand to get to where it is today.”
Stairway to competition…
Of course, prize money is a bright light at the end of the competition tunnel. For Sanergy, the prize winnings provided the capital the team needed to set up operations in Kenya. Winnings from the CEP allowed CoolChip to hire personnel, carry out prototyping, and obtain the necessary tools for product development. But, while prize money can prove key to propelling a business idea forward, just participating in campus-sponsored competitions can serve as a springboard for involvement in other competitions.
Following its participation in the CEP, Arctic Sand was invited to participate in multiple competitions, gaining access to publicity and more prize money. Sanergy’s participation in the $100K served as a screening and validation of their for-profit social enterprise model. Says Auerbach: “People all over the U.S. know about the MIT $100K, and that helped us secure other funding. We did well locally in other competitions like the MassChallenge, and we were a regional finalist for the Cleantech open.” Green agrees that competitions raise the profile of the participating companies. For FINSix, early-stage participation in the MIT $100K served as a platform to compete in the Cleantech Open. Green points out: “getting funding is a competition and people use your performance in the past as a point of entry. So, competitions give you more credibility because people can say, okay, many others have looked at this idea and vetted the idea.”
Reaching new heights…
Now in the second or third years following their debuts in the CEP or $100K competitions, Sanergy, CoolChip, Arctic Sand, and FINSix continue to grow and set new goals at new heights. As they progress through early-stage development to the next stages of maturity, the focus of these companies is set squarely on demonstrating their products successfully, acquiring customers, and expanding their teams.
CoolChip is currently deploying its first set of products to an early group of customers. For CoolChip, product and customer development has called for more expansive operations and a larger team of employees and consultants. From a team of two after the 2011 CEP, CoolChip now includes five full-time employees along with auxiliary personnel.
Also early in its growth, Arctic Sand is now developing an initial product for customer evaluation. After competing in the 2011 CEP, Arctic Sand competed in and won the Clean Tech Open for the North East Region. The company also won the grand prize of the NREL Growth Forum and received the NASA Game Changer Award. Most recently, in 2012 Arctic Sand raised $9.6M in Series A investment.
FINSix is continuing with product development as well, demonstrating products to customers and aiming for a commercial release by next year. Early in 2013, TechConnect honored FINSix with the National Innovation Award. As FINSix strives to strengthen commercial partnerships, the team is grappling with the challenge of structuring their organization in such a way that is agreeable to all parties but protects the young company’s intellectual property.
For Sanergy, working outside the United States presents a unique set of challenges. For over a year, Sanergy has sustained operations in Nairobi, Kenya, processing four tons of waste daily and selling fertilizer to large farms. The team continues to work towards utilizing collected waste for electricity generation, now producing power at a laboratory scale. The company has needed to pay particular attention to business and employment practices in Kenya. One way in which Sanergy has attempted to navigate cultural differences and ensure operational sustainability is by building a workforce in which 85% of the staff is Kenyan.
Sanergy, Cool Chip, Arctic Sand, and FINSix are the results of traversing the long road of transforming an idea from a class project and a competition-ready business plan to a functioning enterprise. While not every competition plan turns into an enterprise, the competitions are equally instrumental to the development of individuals and teams who nurture ideas – that is, to the development of entrepreneurs.
Both Sanchez and Green emphasize the role of the competition as a tool-builder, a way to equip individuals with the skills and resources they need to become entrepreneurs.
Sanchez says: “the competition equips entrepreneurs with a toolset difficult to obtain in a classroom.” He points to the demands that the competition places on participants to articulate their thoughts effectively and concisely. Communicating ideas and inspiring support is a critical skill in multiple business sectors – and is a skill that competitors develop while writing and pitching their plans.
Green echoes this thought, adding, “certainly, for me, [the competition] has been a big part of developing an idea… it forced me to go through the process of developing a business plan. You get different perspectives that can add to your toolset to build a company.” Green stresses the value of receiving feedback and reactions from the wide audience with whom the competitors share their ideas.
A word of advice…
Having made their way beyond the protective shell of MIT’s entrepreneurship ecosystem, these entrepreneurs offered some insight and advice on how aspiring entrepreneurs can bring their ideas to fruition.
Green offers: “I definitely think that if anyone has an idea for a business that they’d like to develop, going through the competition is a really good way to test it and test the dynamic of the team. You need to test your business assumptions and push your thinking about the technology and risks. If you think you want to start a company, you have to really believe in the opportunity and the technology, and the business plan competition is a way for you to test that.”
Sanchez reminds readers “many aspiring entrepreneurs do not realize that competitions tend to be academic in nature. MIT is great; it has put resources in place, such as VMS, to prevent this narrow frame. The role of competitions and the university environment is to provide a structured environment for unstructured pursuits; to provide a safe environment for exploratory endeavors; and to spawn well-equipped entrepreneurs who in turn spur innovative enterprises.”
Auerbach, Sanchez, Shalaby, and Green were once in the position of this year’s CEP, 100K, and Global Ideas Challenge participants. They took the next step and nurtured their ideas from a paper plan and a prototype or two to a full-fledged enterprise. Two or three years after competing, their ideas are alive and well, and today, they continue with the journey to build successful companies and offer real solutions to important challenges.