Venturing beyond

Adam Mendelsohn, Kayte Fischer and Lily Peng are not MBA students, but they have just the answer for cautious venture capitalists who are seeking profitable investment amid the global financial crisis.

Exchanging their lab coats for business suits, the three bioengineering PhD students at the University of California, San Francisco, have transformed their scientific knowhow into a potentially profitable business venture called Nano Precision Medical.

Coming from a nanotechnology background, none of the three had put together a business plan before. However, the team beat their corporate-minded rivals to snatch the top prize in a Hong Kong University of Science and Technology business plan contest.

The fourth HKUST MBA International Business Plan Competition was held at the Clearwater Bay campus recently, with the South China Morning Post its 2009 media sponsor.

The entrepreneurial competition involved students turning cutting-edge technology into workable businesses. It was also an educational opportunity where they gained hands-on experience about how to start a business, attract investment and build their confidence.

Contest chairman Stephen Nason, an associate professor in the department of management, said the idea was to help MBA students with entrepreneurial ideas develop them further.

'It's not really about a competition and who wins. It's about helping teams with serious ideas because most entrepreneurial products fail and they don't fail because they are bad ideas,' Dr Nason said. 'Something like 80 to 90 per cent of new companies fail because they don't have solid financials, they haven't done market research and they don't have the basic fundamentals.'

He said the competition aimed to provide an environment in which teams could present their ideas to real venture capitalists and get their feedback incorporated into their plans. Students could also learn what investors and customers wanted in the real world.

'You can come up with the best academic theory in the world and apply it very rigorously in a way that a professor would love. If an investor is looking at that and say, 'What are they talking about? Tell me how much this is going to cost me and how much this is going to make and convince me', the student would really have to learn how to integrate academic research with real world concerns in order to make a real entrepreneurial business successful.'

Twelve innovative business plans were selected from a pool of more than 80 proposals prepared mostly by graduate student entrepreneurs from top universities around the world. They pitched their business plans to leading Hong Kong executives and professional investors.

The teams arrived on April 2 to compete for US$25,000 in cash prizes and potential investment interest from the judges.

Over the next two days, the teams demonstrated their products in trade shows. In the elevator pitch contest, they were required to impress judges with their business ideas within 90 seconds. Students could not use presentation materials and were judged on criteria such as business viability as well as revenue and profit potential.

Coaching sessions were provided to help teams focus on the core elements of their proposals, find market opportunities or identify problems and to improve presentation styles and strategies.

In the core presentation, teams made a 15-minute presentation to demonstrate their salesmanship, confidence and persuasiveness.

A clear description of the venture, clarity of speech, ideas and actions in conducting the presentation all counted towards the final score.

Students were also judged on their business viability and profit potential in terms of their ability to present a need in the market and a way of meeting it, their unique solution, source of competitive advantage and clear description of their venture's features, benefits, risks, pricing, stage of development and management team.

Additionally, they were evaluated on their ability to prepare sophisticated figures to demonstrate a solid understanding of the financial requirements associated with a new venture.

The teams also had to impress potential investors with a real opportunity.

Lastly, they had to endure a 15-minute grilling by judges. Students were expected to show concision and accuracy while answering questions and maintain their poise.

The innovative business propositions included building underwater robots, a nutraceutical product for developing brain cells and an electronic travel device with multilingual, interactive, visual and audio tour information of the mainland. However, biomedical products with new technologies dominated the event.

The competition champions, Nano Precision Medical, won US$10,000. Second place was taken by Audiollo, a joint team from the University of Michigan and the Georgia Institute of Technology, which won US$3,000.

The other two finalists were Parallel Imaging Corp from the University of Oregon and Clean India from the University of Virginia.

The trio behind Nano Precision Medical impressed the judges by turning their scientific understanding into what the judges deemed a profitable medical technology product. The students' novel technology, NanoFlow, was developed a year ago. It is a system that can deliver a precise amount of medicine for several diseases, including hepatitis C, significantly relieving the discomfort of treatment for the illnesses.

With a soft-spoken presentation, the team compellingly spelled out their business ideas.

'The international market for hepatitis C treatment is quite large,' Ms Peng said. 'A lot of people with hepatitis C are in China. It's really nice to have judges from other countries, especially Asia. We've gotten really useful advice in terms of the market here and licensing.'

Dr Nason said this year's competition was of the highest quality. 'It's also one of the highest quality competitions we've seen internationally. All of the teams have viable products, products that you can really take to market.'

He said Nano Precision Medical addressed a very compelling need. 'They have the patent; they can go forward with it. The team just felt very confident that they would be successful.'

Steven DeKrey, HKUST's MBA programme director and senior associate dean of the business school, said the university decided to run its own competition after sending students overseas to compete in similar events for a number of years.

'A business plan is about the totality of a business,' he said. When you write and present a business plan, you are actually covering the entire basis. We have found our students gaining a tremendous amount by focusing on a business plan. It's like running a business as a CEO.'

HKUST's MBA students were involved in running the competition, which was good leadership training in itself, he said.

The university's executive MBA programme, jointly organised with Kellogg School of Management at Northwestern University, was ranked No1 in the world by The Financial Times in 2007. HKUST's MBA programme was ranked 17th last year.