Governor’s Cup: More Than a Class Project

This April 2-3, the state’s best college business plan teams will gather in Little Rock for the Donald W. Reynolds Governor’s Cup, where they will try to win not only a competition but, for some of them, the chance to follow in the footsteps of companies like Picasolar and MoVista.

Both of those companies parlayed into viable businesses the lessons they learned through the Cup and through Dr. Carol Reeves’ New Venture Development graduate course at the University of Arkansas.

Picasolar, which competed in 2013, is marketing a technology developed by its own Seth Shumate that increases solar cell efficiency while using less silver. With its potentially revolutionary product, the company recently raised $1.2 million and also won an $800,000 SunShot Tier I Incubator Award from the U.S. Department of Energy.

MoVista, a 2008 competitor, sells app-driven software that allows companies to monitor the activities and results of outside field staff.

This year’s competition has attracted 47 undergraduate teams and six graduate teams so far. In April, the best of those will present for 20 minutes and then answer questions from judges. A total of $154,000 will be awarded, including $25,000 to first-place teams in both graduate and undergraduate categories.

The cash prizes are only part of the potential rewards. The judges and audience members aren’t just there for the competition; they’re looking for investment opportunities. Checks do get written.

MARKET-BASED IDEAS
The Cup was created in 2001 by the Arkansas Capital Corporation’s Sam Walls, who decided Arkansas needed to invest in homegrown businesses because studies were showing the state would have increasing difficulty attracting outside industries. A venture capitalist, he had worked himself through college, been introduced to entrepreneurial concepts as an employee at Dillard’s, and then become an investor before joining Arkansas Capital.

When Walls created the Governor’s Cup, few students were learning how to bring transformative ideas like Picasolar to market. The first state winner in 2001 was a bowling alley.

That’s certainly changed. Reeves’ New Venture Development class will enter four teams engaged in world-changing efforts: one offering an online marketplace for biospecimens; one marketing an Alzheimer’s drug; one selling a nutritional shake for pregnant mothers; and one selling solar panels in the Dominican Republic. She said the class averages two actual startups a year.

The Arkansas Research Technology Park’s quarterly newsletter recently featured a lot of names that were familiar to her. “I think they highlighted eight companies, and five of them came through our program,” she said.

The Governor’s Cup process is meant to help students develop their ideas based on market realities. Reeves estimated the Alzheimer’s drug team looked at 200 technologies. Students must also learn to present their ideas to judges who, as potential investors, ask difficult questions.

COMMUNICATION SKILLS VITAL
“To me, one of the greatest skills is just their ability to think on their feet,” Reeves said. “I would say most adults would not want to go through this. It is brutal. It can be brutal, the Q and A at the competitions. I’ve had so many students tell me they’ll never be afraid of another presentation after going through this.”

Those communication skills are vital, said Jeff Amerine, founder of Startup Junkie Consulting, which helps new companies get off the ground. He’s been involved with the Governor’s Cup since 2009.

“I would say about 50% of it, aside from doing the really hard work required to validate the business model, is being able to tell the story in a compelling way, and by the time they come out of the end of that, they’ve got all the skills they need to convince customers that they’re solving a problem that they should pay for and to convince investors that there’s a real opportunity for it to be a scalable venture,” he said.

The competition’s best year was 2006, when 61 teams were entered. That number had dropped to 34 last year – the result of staff transitions at the Arkansas Economic Acceleration Foundation, the arm of the Arkansas Capital Corp. that manages the program, said Marie Bruno, the foundation’s executive director.

The Foundation stepped up recruiting and made a concentrated effort to dispel a growing notion that entrants had to be high-tech like Picasolar. Last year, for example, a team from John Brown University won at the undergraduate level with Arleesa, a company offering custom-made and realistically proportional dolls.

The success at the college level led to the creation of Youth Entrepreneur Showcase (Y.E.S.) for Arkansas, with competitions at the fifth-through-eighth and ninth-through-11th-grade levels. The older group has the most ever teams intending to enter this year, while the fifth-eighth-grade competition involved 242 plans from 35 schools in 14 counties.

ENGAGING TOP STUDENTS
This is the seventh year that Ouachita Baptist University has competed in the Governor’s Cup. Dean Bryan McKinney of OBU’s Hickingbotham School of Business said the school is intensifying its entrepreneurship focus. He said students “start out with stars in their eyes,” but faculty members help bring them down to reality as they hone their ideas and their presentations.

The school awards cash prizes of $4,000, $3,000 and $2,000 to the first three on-campus winners, and then those same amounts, plus a $1,000 award for the fourth-place winner, are awarded during a joint competition with neighboring teams from Henderson State University. Faculty members are encouraging the creation of interdisciplinary teams with students from non-business majors.

“It’s contagious, the whole entrepreneurship thing,” McKinney said. “Our better students are getting engaged in it, wanting to participate, and certainly the money doesn’t hurt.”

The entrepreneurship focus may be a natural for the current college generation, whose members spent some of their formative years in the Great Recession. As McKinney pointed out, they “watched their parents lose jobs, and so working for others didn’t always turn out so well for these kids and their families.”

Four OBU seniors wearing medical scrubs shared the $4,000 check during the joint OBU-HSU competition: Jared Lantzsch of Rogers, Jonathan Jacks of Monticello, Tanner Trantham of Bauxite and Jayson Harris of Maumelle. Calling themselves “The Boom Doctors,” their idea was to create a medical-themed fireworks stand franchise for college entrepreneurship classes.

PRESCRIPTION OF FIREWORKS
The idea grew out of a concept that Trantham and Harris incorporated into a fireworks stand they operated in Maumelle last summer. Theirs was the only stand where customers were greeted, diagnosed with a problem – “wild case of pyromania” or “firecracker fever” – and given a prescription of fireworks to cure them of their illness. The slogan was, “Fireworks so loud you’ll need a bed pan.”

Lantzsch said members of his generation want to be their own bosses and want their ideas to have an impact. The Boom Doctors’ model is meant not just to create profits but to teach students entrepreneurial skills, like the kind Trantham and Harris learned running the stand. Students are expected to collect data that they and the parent company would use to increase sales.

“We want to give them a leadership experience,” Jacks said. “That’s what we want, because we crave that as students, so we wanted to give that to them.”

The team’s members are about to graduate and go their separate ways. For them, this was a class project, and they didn’t expect to do this well. But if they keep having this kind of success, they said they may have to reconsider their plans.

The Governor’s Cup has been funded by the Donald W. Reynolds Foundation since 2004, but that grant ends after 2016. Bruno said the Arkansas Economic Acceleration Foundation is looking for other donors and is confident the money will be found.

“The bottom line is, we’re going to continue the Governor’s Cup, definitely,” she said. “It’s been too good of a thing for our state.”