The following excerpt is from Entrepreneur’s book Finance Your Business. Buy it now from Amazon | Barnes & Noble | iTunes
Prizes from business contests run the gamut. A seemingly infinite number of local and business-school competitions offer small-change awards of $5,000 to $15,000; meanwhile, Rice University doles out six-figure prizes annually, as do accelerators MassChallenge and Techstars. But some big-money contests require winners to sign over a percentage of their equity — a deal-breaker for many entrepreneurs.
So which competitions should you enter? How will you dazzle the judges? And how can you walk away a winner even if you don’t place?
First, don’t just throw everything against the wall and see what sticks. Be selective about the contests you enter; choose those that focus on your market and/or business sector. This doesn’t just winnow the competition; it also gets you in front of judges who know the community or industry you’re hoping to take by storm.
For Jennifer Medbery, founder and CEO of Kickboard, an online student-data tracking program for educators, this meant focusing on contests for educational startups and businesses in New Orleans, where she’s based. Between 2009 and 2012, she raised more than $150,000 in seed money from five wins.
But this strategy isn’t just about money. Staying within your niche will get you targeted feedback from veteran investors and business leaders in your specific field. “Pitching to people in the industry is going to help you hone the pitch that much faster,” Medbery says. “You’re then much better prepared when you talk to venture capital and angel investors.”
Tim Faley, former managing director of the Zell Lurie Institute at the University of Michigan’s Ross School of Business and current Sokoloff Professor of Entrepreneurship at the University of the Virgin Islands in St. Thomas, agrees. “All the students tell us that the money’s nice, but the feedback’s invaluable,” says Faley. In fact, he advises founders of early-stage startups to pursue contests that emphasize feedback and mentorship over financial awards.
Medbery capitalized on both: She won $25,000 in 2010 from the Milken-Penn GSE Business Plan Competition, offered by the University of Pennsylvania, and nabbed two of the contest’s judges as close business advisors. “That kind of access to senior leaders has been invaluable,” she says. “Because these aren’t the kind of people where you could just send them an email.”
Think beyond the money
Contests aren’t just for newbies seeking seed funding, professional services and free advice. Young companies that have nailed down their business models and begun reaching out to customers, partners and investors can benefit, too. “If you’re more developed, then you go into the competition to build awareness,” Faley says.
Jake Irvin knows firsthand how becoming a finalist in a high-profile competition can put a recently launched company on the map. After winning first place in the 2012 U.S. Imagine Cup, a student technology competition sponsored by Microsoft, Irvin received a flurry of media attention for his Tempe, Ariz., company, FlashFood, which delivers restaurant and catering leftovers to food banks and shelters.
“This has been great for us in reaching…