A business idea competition in Minnesota has engaged a powerful network and resulted in over $60 million of outside capital for its finalists.
In 2005, serial entrepreneurs Scott Litman and Dan Mallin sought to ignite a more entrepreneurial spirit in their home state of Minnesota. To do this, they developed a new framework for a business plan competition for young companies – the Minnesota Cup. The first Cup took place later that year in partnership with the University of Minnesota, the state government, and Wells Fargo.
Eight years later, the network of stakeholders involved with the cup has continued to grow, with key players across public, private and social sectors working together in order to support Minnesota’s most promising young companies.
The Minnesota Cup works to accelerate the development of the region’s breakthrough ideas for new businesses. It connects early-stage entrepreneurs with funders in order to increase local economic growth, create jobs, and keep the region’s most enterprising minds in Minnesota. The Cup also aims to affect a bit of culture change, challenging the state’s traditionally risk-averse climate by highlighting the potential of entrepreneurship and the structures that support it.
Beginning in March, entrepreneurs across Minnesota submit detailed applications that profile the strengths and ambitions of their early-stage ideas. Eligible ventures must meet two criteria:
- Currently generate less than $1 million in revenue,
- Show powerful growth potential.
The entrepreneurs enter one of six divisions: General, High Tech, Life Science/Health IT, Energy/Clean Tech, Social, and Student. Divisional review boards consisting of local executives, serial entrepreneurs, policymakers, and investors narrow the pool of entrepreneurs down to 60 semifinalist teams, and each team is tasked with composing a 10-page business plan and a 15-slide presentation for investors in order to qualify for the next round.
But these entrepreneurial ventures do not take on these challenges on their own. At this stage, semifinalists are matched to a small group of mentors, who are seasoned business leaders volunteering their time. Matches are made based on semifinalists’ preferences, and this ability to choose establishes trust, respect, and the expectation of success on both sides.
Three finalists are chosen from each division, and the entrepreneurs are then coached on presentation skills prior to showcasing their ideas to the grand prize review board. Winners are granted between $10,000 to $25,000, depending on the division, as well as consulting services and preferential access to the Minnesota Angel Network. The division winners then present to the Grand Prize Review Board, who selects one grand prize winner to be awarded an extra $40,000 in seed capital.
Public interest was strong at the start of the competition, and has continued to increase as the competition has grown. The Minnesota Cup has supported approximately 8,000 entrepreneurs and garnered over 100 million media impressions across the country since its inception. Its impact on finalists has been considerable. The 72 finalists from the last 4 competitions have raised over $60 million in additional capital while continuing to spur innovation and job creation in the state.
Success stories include 8thBridge, a new leader in social commerce. Since winning the competition in 2009, 8thBridge has attracted over $16 million in capital and created over 100 jobs, in addition to creating a partnership with Ebay. 2005 finalist HealthSimple was sold to Johnson & Johnson in 2007, and 2012 winner EnviroLasTech, a company that takes mineral ash and recycled plastic to produce building materials, is creating a sorting and production facility next to Rochester’s waste-to-energy incinerator in hopes of making the city the first in the world where nothing goes to waste.
In addition to the coaching, consulting, and access to the Minnesota Angel Network that these companies receive, their successes can be attributed to the symbolic effect of the competition: being a Cup finalist has become “a seal of approval for potential investors.”
Many finalists have cited their Cup mentors as instrumental to their growth. These relationships often extend beyond the duration of the competition. A number of Cup mentors have gone on to serve as investors and board members for entrepreneurs who participated in the competition.
For more information, please visit Minnesota Cup’s website, www.breakthroughideas.org
Contributed by Rexy Josh Dorado and Haley Goodman.