The Value of Start-Up Competitions

lui

I took part yesterday in a committee to select University of Ljubljana's Innovation Prize for the best start-up. It was fun and interesting experience to watch presentation of eight finalists. But looking at other members of the committee and questioning my own competence, I couldn't but think that our selection is entirely random. I'm certainly not an expert in micropumps or cavitation, and machine engineers in the committee certainly don't know much about consumer web services. The committee I was member of yesterday is in no way special. I took part in several such committees before and they were always stuffed with people who were certainly accomplished and successful in their fields, but borderline competent to judge start-ups presenting themselves. But even if the selection committees were composed of the most competent people in the world, their capability to identify successful start-ups before market does would be non-existent. If it weren't so, than venture capitalists would just invest in winners of start-up competitions and wouldn't have to cope with 80-90% of their investments which fail. I'm not arguing that start-up competitions are useless or should be abandoned. On the contrary, I think start-up competitions provide a great way for founders to have attention of some very smart and experience people. Quit often members of committees are scouts for venture capitalists or they are seed investors themselves. Getting in touch with such people and hearing their feedback is a big boon for nascent start-ups. Therefore I see start-up competitions as an interesting game, where picking winners and losers is not the actual goal but just a mean to get everyone fully involved. Unfortunately, start-ups often take results of start-up competitions too seriously; winners mistaking winning with customer and product validation, and losers loosing faith in their idea, while in reality picking winners and losers of start-up competitions is done completely at random.

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