For the past two years, Verizon has provided an exciting opportunity to startups with its Powerful Answers Award. With $1 million in prize money awarded to multiple companies, the contest offers a great alternative to venture capital funding.
Verizon is part of an exciting new trend among Fortune 500 companies. Eager to find the next big product, these companies are hosting competitions, with the prize being a combination of funding and incubator space and support.
But is this the best option for startups? Two of Verizon’s Powerful Answers Award winners, TalkItt’s Danny Weissberg and Books That Grow’s Daniel Fountenberry, offered their thoughts on big startup competitions. Are you thinking of entering a startup competition… here are a few things you should know!
A New Way to Funding
Weissberg is no stranger to competition wins. Weissberg not only won $250,000 in Verizon’s competition, but TalkItt has also won a competition hosted by The Wall Street Journal and was a finalist in the Philips Innovation Fellows Competition. By winning the Verizon prize, TalkItt now is in a position where it can provide the first product without relying on external investors.
“That’s a fantastic way of getting money for entrepreneurs,” Weissberg says. “It’s not only the money. When you win such a competition, it’s a lot more than that. Verizon gives you a lot of credibility and also a strategic partner that can take you to market in a much better way.”
Corporate Backing
Partnering with Verizon was a big win for Books That Grow, since the company’s backing means the app can now touch any learner that has a Verizon-enabled device. As the company expands to other tech companies, having the backing of a large telecom brings enhanced credibility to the company.
“Having their technical expertise and their brand behind us makes it much easier for us to have conversations with large corporate entities and go directly to the top and to explain to them why we can bring value to their users,” Fountenberry says.
Useful Capital
As great as competition wins are, both Fountenberry and Weissberg emphasize that venture capital still has a very important place in the industry. Not only is there a great deal of competition attached to these prizes, with Verizon, for instance, there were hundreds of thousands of applicants but only 12 winners.
“I think it’s important to find a competition where the work is not duplicative,” Fountenberry says. “This isn’t charity. They’re not giving money to bad businesses. The work that it takes to win these competitions—you should know your business back and forth, you should know your competitors, you should know your market, you should be striving toward something big. If you’ve thought these things through, it won’t be that much work and time to apply.”
Plan for Success
When prize money is at stake, big companies want to know they’re investing in a company that will make a huge impact and raise their brand. It’s important to focus on building a strong business and de-risking it the same way a startup would before seeking investor dollars.
“When it comes down to giving out the money, they pull the best venture capital minds in and say, ‘Which one of these do you think is going to succeed?’“ Fountenberry says.
After the Competition
Both Weissberg and Fountenberry are now at a stage where they’ve won the competition money and benefited from the incubator experience. At this point, both founders must focus on delivering on the promises it has made.
“Every day I get dozens of mails from all around the world of people, saying, ‘This application is a lifesaver for my kid, for my mother,” Weissberg says. “The beauty is that now that we got this prize, we will be able to deliver.”
