While it depends a lot on who’s asked, there is general agreement that the survival rate for tech-based startups in the United States is low.
Some statistics suggest a 90% failure rate over 10 years; others say half or more make it five years or more. Either way, the odds aren’t great … although finalists in the Wisconsin Governor’s Business Plan Contest have done their best to beat those odds.
Launched in 2004 as a way of encouraging more tech-based startup companies in Wisconsin, the Business Plan Contest is an annual centerpiece of the Wisconsin Entrepreneurs’ Conference. This year’s event takes place June 4-5 at Madison’s Monona Terrace Community and Convention Center, with the top 13 entrants making live “pitches” to judges and others between 3 and 5:30 p.m. the first day.
Separate surveys over time have shown a survival rate of 70% for contest finalists who advance through earlier rounds in four broad categories: Advanced Manufacturing, Business Services, Information Technology and Life Sciences. Examples include:
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Milwaukee-based NovaScan, which shared the top prize in 2004;
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Wausau-based U.S. Trailmaps, part of the class of 2006;
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Vector Surgical of Oconomowoc, which won in 2007 on its third try;
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65 Incorporated of Mequon, which won the IT category in 2015; and
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Madison-based Polco, which topped the IT group in 2016 and now serves more than 1,000 American communities.
Others over time include CranioSure, SixLine Semiconductors, Rapid Radicals, Atrility Medical, Plumb Pharmaceuticals, Imbed Biosciences, Spraycision, PhylloTech, Fishidy, Roddy Medical, Spay Vac for Wildlife, NovoMoto, COnovate, eCourt Reporters, Fleet Cycles, Seedlinked, Last Lock, Graceful Management Systems and DataChat.
Some contest graduates were acquired by other companies, which is also a sign of success. Those include Nurse Disrupted (by AvaSure), Optametra (Tektronix) and AquaSensors (Thermo Fisher).
Worth noting is that some companies missing the final two levels of competition hit it big, anyway, with consumer-loyalty app Fetch Rewards being a leading example. A competitor in 2013, Fetch has raised at least $578 million from investors since then.
Precise records are hard to come by, but other companies engaged in the contest have raised at least $350 million in angel capital, venture capital, grants and venture debt over time — all while creating jobs and economic value over time.
It helped that the birth of the contest corresponded with the start of Wisconsin’s Qualified New Business Venture tax credits for investors, which remain in force today and may receive a much-needed updating in this session of the state Legislature.
This year’s crop of finalists hail from seven cities across Wisconsin and include technologies such as: A sales tax automation service for Shopify merchants; medical imaging for cell therapy; a separator to suppress dendrites in rechargeable ion batteries; a process to convert a harmful dairy byproduct into a natural, low-calorie sweetener; a non-composite chronic wound dressing; a sensing technology for soil moisture and nitrate; a medical coating technology for titanium implants; and a therapeutic for peptic ulcers and gastric cancers.
Each entry was allowed to walk before it was forced to run, receiving feedback from judges, mentors and past contestants along the way. In other words, they didn’t start with a fully formed plan but instead wrote 250 words that captured the essence of their idea.
Starting a young company in the tech space or elsewhere isn’t easy. Given that reality, the history of the Wisconsin Governor’s Business Plan Contest illustrates that many entrants are still in business, have attracted investors, made sales, been acquired or otherwise gone on to other productive ventures.
Many others helped those young companies along the way, but the Business Plan Contest offered a head start.
