In a few days we’re headed to TechfestNW to participate in PitchfestNW. The truth is, we couldn’t be more proud to be a part of what’s happening in Portland and the PNW.
TfNW won’t be the first time we’ve been in a pitch competition and it certainly won’t be the last. With that in mind, we’re proposing a new way to approach pitch competitions.
Over the next few minutes, we’ll walk you through how things are, how they should be and how you can help.
The Hunger Games of the Startup World
Do you remember that scene in Hunger Games where Katniss is nearly to the edge of the arena? In frustration, Plutarch orders some fire to barrel through the forest in front of Katniss and send her back toward the people who want to kill her.
As the story goes, she overcomes relentless internal and external battles to be the winner. There is carnage, killer instinct and a noticeable lack of collaboration.
Pitch competitions are a lot like this structure. You, along with dozens of other startups, are pitching your company in the hopes to win one grand prize: funding.
If you’ve ever participated in one of these competitions, you know how much energy and resources it takes to travel to a new city and showcase the best of what you do and who you are.
Less Carnage, More Collaboration
Rites of passage have been on their way out for a long time. A winner-takes-all philosophy is, we think, part of that aging mindset.
There’s no need for carnage when collaboration can produce much better long-term results for everyone involved in a pitch competition.
So, we’re proposing a new way to run these contests. Instead of having a select group of investors pour their money into one winner, why not have them distribute their funding to all startups involved?
Here’s how our founder Will Clausen put it in a recent press release about this concept:
“A small group of well-funded companies have a better chance of growing, creating jobs and playing a meaningful part in the American economy. Why limit those benefits to one winner?”
Aren’t You Guys Being a Little Naïve?
We took a long time to think about this question. We believe the pitch-comp system is broken, but is the fix really as easy as saying everyone should win?
Yes and no. Everyone winning is the goal, but constructing the path to get to that goal is where real change happens. And right now, that road is riddled with quirks and inconsistencies.
Here are just a few of our observations about the system as it stands today:
$10K per company should be the minimum
Let’s say a competition hands out a $50K prize (usually at the high-end of prizes) and there are 50 startups involved. In our proposed system, each startup will get $1K. A thousand-dollar investment doesn’t work for VC’s because the paperwork alone costs more than 1K.
Solution: Per-team winnings should be at least $10K and participants should be limited.
Taking the $$$ Isn’t Always Wise
Investors have their money in dozens of projects. There have been situations in pitch competitions where startups are fighting for prize money/investments from investors who have a stake in a competing company.
When this is the case, it doesn’t make a lot of sense for a startup to show up and compete against other companies just so they can win and have to battle another competitor.
Your Investors Might Be Voting
This is a variation on the last problem we presented. In this situation, one of your investors is a judge in the competition. To keep things fair, the investor shouldn’t be allowed to vote for you. Now you’re already playing from behind.
If you allow the investor to vote for whomever he or she wants, two scenarios play out: they choose you and your win is saddled with warranted skepticism, or they choose someone else and you wonder why.
Solution: Judges can’t have financial ties to competitors.
Criteria for Judging are Inconsistent
One of the things we love about pitch competitions is the anticipation and anxiety that comes with waiting to hear who wins.
The anticipation is built on a very specific set of thoughts: you know the rules, you know what your company offers and you know how confident you are in your pitch. When you feel good about those three areas, your expectations rise.
But what if you don’t actually know the rules/criteria even though you thought you did? A lot of us find ourselves in this position once the winner is announced.
Is the winner picked for their ability to make money now, after they get $100MM in funding or is it solely based on their pitch?
Solution: Make the basis of judging clear beforehand.
Preference for Funding Stages
We’ve all fought hard at competitions only to find out the reason why judges picked a winner meant you never had a chance in the first place.
This type of revelation is linked to setting forth a clear set of criteria, but it also points to another issue: at what point do you turn startups away?
For instance, a company wins a $100K competition because they just completed a nearly $1M round of funding. They’re chosen precisely because of their recent cash inflow.
The very nature of a pitch competition is for startups to battle for a prize that will provide a boost for their development. Why give a $100K prize to a company who just raised 10 times that amount?
This is similar to no-limit poker tables where a newcomer with a $5K stack of chips is trying to win pots from players with $1M. The chips are quite literally stacked against you before you even sit down at the table.
Solution: Tier pitch competitions based on funding, or create completely separate competitions.
Exhibition Spaces Limit Functionality
Many pitch competitions take place in a trade-show style setting where startups are confined to a booth. We, as well as other startups, find that this setup works great for products or services aren’t inherently navigational or movement-based.
Without a space conducive to live demos, those startups lose their “wow” factor to competitors with smaller products or more visual products.
Solution: Plan the competition space based on the nature of each’s startup’s product or service.
Scorecards tend to be hidden
We’ve been to plenty of competitions where scorecards are hidden from competitors. When this is the case, it’s really hard to know who is behind the scenes monitoring conflicts of interest and judging criteria.
International sporting competitions display scores from all judges. Why not pitch competitions?
Solution: Reveal judges’ scoring to foster transparency and accountability.
What PitchfestNW Startups are Saying
We’ve shared our thoughts with all the startups we’ll be competing against at PitchfestNW. Here’s a quote that represents the type of responses we’ve been getting:
“I fully applaud Will for putting forward this proposal and wholeheartedly support this concept. As the owner of a business with social good at its core, and an intent to connect the seemingly disparate arena of sanitation to the startup landscape, we’re certainly about contributing to a positive shift on multiple fronts. Rather than replicate the practice of corporate America, the startup world should be about setting a new course, one based on truly healthy values and objectives so we can build the world we would all like to see and thrive in. Count us in.” – Nicole Cousino, Nature Commode.
What You Can Do To Help
Here’s what you can do to help:
- Share this post on Twitter and tag it with #thenewpitch.
- Tell your pitch-weary colleagues and innovators about #thenewpitch
- Write your own posts about why the current pitch-competition framework needs an overhaul.
- Email us your thoughts: jamesduren[at]indoormaps[dot]com
Our efforts to change the way pitch competitions work is an ongoing campaign. Add us on Twitter (@liveindoormaps) or subscribe to our blog to get the latest updates.