Invest Nebraska’s East-2-West competition to award $50,000 to entrepreneur
Added mention of Lincoln Journal Star article on 10/28 at 10:50 a.m.
From the same organization that sponsors our Creative Capital Pitch Session $1,000 prize, comes a competition much larger in prize money and scope. On December 11th, East-2-West: The Nebraska New Venture Competition will award an entrepreneur or team a $50,000 equity investment from Invest Nebraska Corporation.
In a press release issued earlier this month, Invest Nebraska's Executive Director, Dan Hoffman, recollected the entrepreneurial spirit he witnessed across the state in the regional competitions. With East-2-West, Invest Nebraska is opening up the flood gates and inviting anyone from the state to participate.
Here are a few more details from the press release:
- It will take place on December 11th in Lincoln at the Del Ray Ballroom in Lincoln’s Haymarket.
- Open to anyone 18 or older who is interested in operating a business in the state of Nebraska; all entrepreneurs with a startup idea, as well as local business owners looking to expand or improve their businesses.
- The Competitions are based on the success of the annual Hormel Family Foundation’s Business Plan Competition in McCook, Nebraska. It was the goal of Invest Nebraska Corp. to take this template to other Nebraska communities, allowing others an opportunity to carry the Nebraskan tradition of entrepreneurship forward.
The Lincoln Journal Star has an excellent writeup on the competition with a spotlight on Agile Sports Technology. I encourage you to check it out.
Business plan competition coming back bigger and better by Matt Olberdin, retrieved 10/28:
After a two-year hiatus, a statewide competition for entrepreneurs is coming back bigger and better.
Invest Nebraska is partnering with the Lincoln Chamber of Commerce and Lincoln Partnership for Economic Development to conduct [...] read full article
Information about the application process and details about rules and guidelines can be found at nebusinessplancompetition.com. The deadline for submitting a business plan is November 27th.
COMMENTS
This sounds great until you read the fine print and you see that it's $50,000 in exchange for an equity stake in whatever it is your pitching. How big of an equity stake? We don't know, except it won't exceed more than 49% of company. That is absolutely insane and nobody should participate with those kinds of terms. Think about when you go to get another round of funding. Let's say you give up 30% now on 50k. What happens when that gets spent (which it will very quickly, 50k is peanuts in terms of starting a business)? What will you be willing to give up in the next round of funding? The stakes in this competition are way to heavily tilted in the favor of the people putting up the money and the money being put up is not enough to justify those kinds of terms.
You can always walk away if the terms they ask for are something that you don't agree with if you win. If they want to be seen in a pleasant light (and it's to their advantage if they are going forward) the stake would be much, much, much more founder-friendly than the "not greater than 49%".
I'm sure the final agreement with the winner won't be public, but I hope for the sake of the contestants and Invest Nebraska that the terms are better than what are written in the contest rules. They make it sound like a pretty bum deal.
The interest and comments East 2 West are generating are greatly appreciated. However I wanted to clarify Timothy's comments and expand upon Gabe's opinion.
Timothy is approaching the competition in the domain of a profit maximizer (and rightly so). We are approaching the competition in a more philanthropic, non-profit domain. Our ultimate goal is not to necessarily make a return on our investment (though that would be nice) but to 1) educate the winner on the valuation process, 2) help the winner grow since we would have a direct self- interest in the business and 3) incentivize all entrepreneurs to complete and present viable business plans. This competition is one more piece of the puzzle in growing Nebraska's start-ups that have high growth potential.
The reference to 49%in the rules is to assure entrepreneurs that we don't want to control their business or run their business. The valuation process must be done in good faith by both sides. We have now held five regional competitions across Nebraska with no trouble in valuing the winner's start-up business and negotiating our investment.
One only has to look at our operational assistance program for potential high-growth start ups to see that our program is very founder friendly.
Should anyone have further questions, I'm always available.
Post a comment
Want an avatar of your own? Silicon Prairie News uses Gravatar to give an identity to all those insightful comments you post.