Many new business founders view winning competitions as validation. The prizes are always welcome, and the exposure and connections made through them can lead to a critical leap for a new business. The problem: contests that allow unlaunched companies to compete rarely have the diligence or vetting phases needed to ensure that claims are valid and that the assumptions have been properly assessed. I know of many companies that have won several competitions that failed quickly after launch. And some never made it out of the starting gate.
When the prize is business and personal development, the competitions are largely collaborative and instructive. When a substantive amount of cash is involved, as in the recent La IDea competition co-sponsored by Venture Hive and several U.S. agencies, the top prize of $100,000 brought a decidedly sharp-elbowed attitude to the event.
Winning is great. But don’t let those opportunities sidetrack you from actually building a great company and validating its value through customer acquisition. Paying customers are the ultimate validation.
So how can you determine how to spend your time and limited resources on the competition scene? Ask yourself these questions.
Is the competition a match for your current status? Is it seeking companies doing what you do, or within the industry you are operating in, or do you have to bend your story or brand to make it fit?
Is the potential value-added just for the prize winner(s) or will there be high-quality mentorship, networking with the key people you had previously identified as potential board members or sales leads, or additionally trainings or workshops to support your business? If you don’t win, will you still feel like that was a good investment of your time?
Does the timing align with your strategy? Of course you can move up deadlines a few weeks to meet a great demo opportunity, but will doing so distract you and your team from supporting your customers or closing revenue opportunities?
When you do participate in events, especially competitions, the goal is not only to win the major prize. You also work toward winning Ms. Congeniality. Your fellow contestants may have access to contacts and resources outside your sphere. Going in with air-punching moves and keeping up your game face may work on stage, but it won’t get you an intro to the investors or other stakeholders in attendance to support a competing startup. Being friendly to everyone may lead to investment and other opportunities worth much more than the competition booty.
The real winners are the entrepreneurs who may never get press or raise a lot of money but create successful, sustainable businesses.
People help people they like and investors invest in people they like. with so many great companies out there, sometimes the differentiator for investors or potential customers is who vouches for you.
Who is willing to put their name on the line for you? There’s a question you need to ask yourself. If you can’t come up with a good answer, don’t wait for the next formal competition to start positioning for the prize.
Susan Amat is the founder of Venture Hive, an ecosystem development company focused on international entrepreneurship education based in Downtown Miami. Follow her on Twitter at @SusanAmat.