06 Jun Winners of past business plan contests secure funding, credibility
Madison, Wis. – One state initiative aimed at galvanizing the high-tech industry in Wisconsin appears to be having the desired effect.
Several emerging technology companies have earned much-needed start-up momentum, and attracted the attention of investors, after submitting winning business plans to a competition that has attracted hundreds of ideas.
The Governor’s Business Plan Contest, produced by the Wisconsin Technology Council, has benefited promising entrepreneurial companies with prize money and exposure to contacts and business development resources since its launch in 2004.
WTC President Tom Still said the finalists in this year’s contest presented some of the most competitive and compelling plans yet, especially in the areas of Internet, personal, and homeland security.
“The judges reached the point where there was little qualitative difference between entries,” Still said. “We are seeing exceptional quality.”
Still explained that 60 percent of the finalists from the past two contests secured financing from angel investors, banks, and other business partners. “As startups, these companies are way ahead of the curve,” he stated.
Perhaps the most emblematic of these companies, the Madison-based biopharmaceutical, Mithridion, Inc., captured the $100,000 Grand Prize in 2005 for its work in the development of drugs to treat neurodegenerative diseases, including Alzheimer’s. The company received $20,000 in cash as prize money, and contest sponsor University Research Park donated 2,400 square feet of fully subsidized and equipped laboratory space for one year.
But the prize money and facilities were only the beginning for Mithridion’s founder and CEO, Trevor Twose. By August, he anticipates the transfer of $1.6 million in funding from Rosetta Partner, LLC, an Illinois-based investment management firm and member of the Madison-based angel investor network Wisconsin Investment Partners. The money has allowed Twose to add six new research scientists to his team.
“The contest got our name out and about,” Twose said. “There has been a lot of coverage as a result of the competition, which in turn has helped with financing.”
Mithridion’s plan to develop a potent drug lead that tests have shown protects neurons from peptide A-beta, a toxic principle responsible for neuronal deterioration in Alzheimer’s patients, won the top score in the Life Sciences category, edging out 206 competing submissions in the 2005 BPC.
The quality of Mithridion’s business plan cemented its relationship with Middleton-based Gilson, Inc., which provided Mithridion with a High Performance Liquid Chromatography device. The HPLC is a key piece of capital laboratory equipment used in the purification of large quantities of drug candidates.
Twose plans to develop a drug candidate within the next 12 to 15 months and apply to the Food and Drug Administration for clinical trials 12 to 15 months after that. “We are 30 months away from clinical trials, assuming that everything runs smoothly,” he said.
Another new company on the verge of clinical trials, Milwaukee-based Novascan, tied for the BPC grand prize in 2004. It is developing a non-ionizing imaging technology that can detect breast carcinomas at an earlier stage, and a smaller size, than any device currently in use.
CEO Larry Wells explained that the BPC not only helped him open doors to angel and venture capitol investors, but the business plan submission process helped coalesce the three central elements of his growth strategy: money, market, and management.
“We’re excited,” Wells said. “We’re in a great spot right now.”
But even for entrepreneurs trying to address more obscure markets than those associated with Alzheimer’s treatment and breast cancer imaging, the BPC has been a boon.
For Scott Fulton, founder and CEO BioSystem Development, LLC, which tied for the grand prize in 2004, the BPC represented even more.
“I really date the launch of the company to that event of winning the contest,” Fulton said. “It’s been a tremendous help. The big thing was the credibility we earned coming out of it.”
Fulton explained that he and his partner struggled to raise between $75,000 and $80,000 from friends and family. However, after securing a recent breakthrough sale with a prototype product used to make work flow of drug development more efficient, Fulton said, “Talks with investors have been different.”
Still said despite the early success of the BPC, he is continuing to refine the process and reach out to entrepreneurs to get the best possible range of entries. To assist promising contestants, the WTC is developing new mentors and a boot camp program for semifinalists consisting of a short course in strategies for perfecting business plans and communication with investors.
Fond of funding
However, even small business executives who have succeeded in the BPC struggle with the challenges and volatility of their industries. Both Twose and Wells identified the shortage of available funding as their primary obstacle.
“This is a high-risk, high-reward game,” Twose said. “I would have wanted to get funding earlier.”
Wells said that NovaScan is operating on a shoestring budget as he attempts to secure additional funding in what can sometimes be a very risk-adverse state. “I’m very up front with investors,” Wells explained. “A lot of things can go wrong.”
The second difficulty is finding qualified staff.
“There is a lot of talent in the area, but not everyone is willing to take a risk on a start-up company.”
Twose echoed the sentiment. “Madison has a high quality of life, but the challenge is that there isn’t a big pool of experienced [senior] management,” Twose said. “But right now, we’re in full swing with drug development. We’re heads down at this point.”
Previous contest stories
• Mithridion raises $1.6M through angel networks
• AquaSensors lands $360,000 angel investment
• Alzheimer’s drug firm and more winners named in Wisconsin business-plan contest
• Governor’s business-plan contest has a surprise ending