The Massachusetts Institute of Technology's entrepreneurship competition was founded as a student-driven initiative 15 years ago by the MIT Entrepreneurs Club and the MIT Sloan New Venture Association to bring together students from the engineering school and the MIT Sloan School of Management:
Mid-1989, members of the new student Entrepreneurs Club (E-Club) Peter Mui, Douglas Ling and Richard Shyduroff were looking to create a business start-up competition to let more people know about the club and simultaneously find a better way to evaluate and support the increasing number of business ideas brought to the club. Meanwhile, across campus at the MIT Sloan School of Management, students from the Sloan New Venture Association, led by Robert Aronoff, were planning to develop a student business plan competition. The two groups sought each other out and joined together to set the concept for the first competition. They gathered advice from a number of people inside MIT and in the business community. Among the advice, John Preston, then director of MIT's Technology Licensing Office, suggested they give a $10,000 prize to the winner, so that team could file for a patent. A bit of fundraising later, the MIT $10K was born.
The first year the final awards were held in the large lecture hall, 10-250, as part of the monthly MIT Enterprise Forum meeting. The executive summaries for 64 entries had been submitted to the competition, with about 84 students participating. Five judges from the entrepreneurship field had reviewed the finalists' full business plans. Brief videos showcased presentations of the finalists. In the end, the $10,000 Grand Prize went to Zhen-Hong Zhou for his entry ZZ High Yield, a laser particle remover for semiconductor wafer cleaning. The runner-up team that won $5,000 was the DataTools Inc. team with students Mark Hansen, Frederick Diehl, Samuel Kho and James McGraw. ZZ High Yield did not go on to form a company, but DataTools did, organizing a year later under the name QDB Solutions Inc.
From the beginning, the competition offered a number of supports to the entrants to help them along the process of developing the business plan. Team member matching was offered, and meetings were held once or twice a week where entrants could bounce around ideas and get assistance. The detailed feedback from the judges has also been prized by entrants who are honing their plans and is part of what makes MIT $50K teams so successful at launching.
The competition grew and changed, but stayed true to its roots and remained a student-run venture. In 1996, the competition changed to the MIT $50K Entrepreneurship Competition and has since offered prizes of $30,000 to the winner and $10,000 each to two runners up. In its 15-year history the competition has awarded about $500,000 in cash and business start-up services to outstanding teams of student entrepreneurs. It is a campus-wide event. Students from all five schools at MIT (Sloan, Engineering, Science, Humanities, and Architecture) participate. The competition final awards no longer fit in lecture hall 10-250, and instead are held in Kresge Auditorium, the largest hall on campus, drawing hundreds of spectators each year, including students, media, venture capitalists, and others in the field of entrepreneurship.
The competition is now judged by a panel of about 19 industry professionals, from venture capitalists to patent lawyers to entrepreneurs, including one judge, Joe Hadzima, an MIT Sloan lecturer and Managing Director of Main Street Partners, who has donated his time every year since year one. Around seven teams are chosen as finalists. The competition is student run, from the fundraising to the event planning, involving about 70 students each year in just the organizational efforts. This year 427 entrants joined together into 127 teams to compete, with some students competing on more than one team.
The MIT $50K and the MIT's entrepreneurial environment build on each other. The Institute and its students have had an entrepreneurial bent since MIT's inception. The first entrepreneurship course was taught at MIT in the early 1960s. The formation of the $10K/$50K competition showed faculty the student's tremendous enthusiasm for entrepreneurship. The MIT Entrepreneurship Center, housed at Sloan, grew up amid this excitement, providing formal courses and centralizing the research and study of the field.
The submissions to the MIT $50K have acted as a technological and economic indicator--showing which segments are preparing to take off. Since much world-class research takes place at MIT, these students are presenting ideas that will shape our world tomorrow. Reading the entries you can see several trends: In the year 1990, the type of entries was fairly evenly spread over software, hardware, consumer and service proposals with some materials/physical sciences, and some other varied proposals including two medically related ones. By 2004, the life sciences/biotech/medical devices category reached 27% of the entries and had captured the Grand Prize for 5 years running. Building to the year 2000, there was a huge surge in networking/internet proposals which have since leveled out. Environmental teams were not present at the first competition, and now they have a significant presence.
The competition and its resulting companies receive accolades in the U.S. and international media each year. The San Francisco Chronicle named it the “granddaddy” in April, 2000, and it was described by Inc. Magazine as the business plan competition that is “more equal than all the others.”
The competition has successfully ignited company formation among students at MIT and the MIT $50K measures up well against incubators and other methods of economic development. More than 80 companies have been formed from the teams that have entered this student competition. These companies have employed more than 1600 people and have a valuation of over $4 billion. The competition serves to encourage those with an entrepreneurial bent, helps them get started and provides training and tailored feedback on their proposals. Many entrants who do not start-up their $50K company go on to start other companies or work in entrepreneurial settings during their career.
In 1998, MIT hosted the first business plan conference, the annual MIT $50K Global Start-up Workshop, to help schools from around the world set up or improve their business plan competitions. MIT continues this leadership role and has organized Workshops in seven countries, this year alone drawing business plan groups from over 35 countries.
The founders have built a rich legacy with this competition. It is a legacy of economic success, of education, and inspiration. The MIT $50K itself is really the ultimate start-up, and many people and businesses have benefited as a result.
Armina Karapetyan, $50K Communications Lead
Kathleen Rowe, MIT Sloan Media Relations
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