Being from Arkansas carries a certain degree of swagger in some fields – retail, poultry, rice and trucking, for example.
Perhaps it’s time to consider adding collegiate business plan teams to that roster. The young entrepreneurs who make up these teams, most of them from the University of Arkansas, are helping create a strong entrepreneurial brand for the state. For the past several years, Arkansas students have continued to fare well at national competitions and, more importantly, in the real business world.
Several appear to be headed toward "big exits" – selling out to big corporations for big money or perhaps even launching an IPO.
The most recent business plan teams from Arkansas that have been successful in competitions and appear on track to substantial business success include Agricultural Food Systems, a John Brown University startup that has licensed UA technology to create an automated way to gauge the tenderness of beef coming off the processing plant line, and CycleWood Solutions, a UA startup that has licensed University of Minnesota technology to develop a shopping bag that biodegrades in the presence of bacteria in the soil.
Also on track for post-competition business success are the top three graduate-level winners at the 2012 Donald W. Reynolds Arkansas Governor’s Cup: UA startups Boston Mountain Biotech, which developed a method that makes it much cheaper to bring protein-based pharmaceuticals to market; SpatiaLink Solutions, which created software that helps retailers manage their shelf-space productivity; and Learning DifferentiatED, which developed innovative GED-preparation software.
All the UA teams are mentored by Carol Reeves, an entrepreneurship professor in the Walton College of Business who has become a celebrity in her field. These teams continue a string of successful Arkansas teams led most notably by BiologicsMD, which has developed a new treatment for osteoporosis, and Silicon Solar Solutions, which produces polysilicon solar cells. Both firms, UA startups headquartered in Fayetteville, are about to begin manufacturing their products.
In 2010, BiologicsMD won both the prestigious Rice University Business Plan Competition and the "Super Bowl" of collegiate competitions, Moot Corp (now officially named the Venture Labs Investment Competition) at the University of Texas at Austin. One of the rewards for winning each event included closing the Nasdaq. That same year, Silicon Solar took third at Moot Corp and won several competitions, including the Stuart Clark Venture Challenge at the University of Manitoba, for which it got to ring the Nasdaq bell.
The success of UA teams during the past several years has landed Reeves and the entrepreneurship program at the UA national recognition. Reeves last year was included in the Fortune list of the top 10 most powerful women entrepreneurs. Her reputation was bolstered by the acceptance of three UA teams – SpatiaLink, Boston Mountain and Learning DifferentiatED – into 2012 Moot Corp. Each team won a qualifying competition to earn a spot in the field.
Having three teams from the same school making the international field of 36 was a feat never before accomplished in the event’s 29-year history.
The 36-team field included teams from some of the United States’ most prestigious universities – MIT, Johns Hopkins, the University of Chicago – as well as countries spanning the globe.
Yet three of 36 hailed from Fayetteville.
"That is a noteworthy accomplishment," Reeves understated.
Competing With the Best
The business plan competition held each year at Rice is considered the most selective and perhaps the second-most prestigious behind Moot Corp. It also attracts teams from across the globe. Even though SpatiaLink placed second at the Governor’s Cup, it was the only Arkansas team selected to compete this year at Rice. In Houston, it was up against 42 teams selected from more than 1,600 applications with more than $1.5 million in prize money at stake.
While SpatiaLink didn’t win the competition or any of its major cash prizes (it finished second in the runner-up track at Rice and made the wildcard round at Moot Corp), selection alone earns it distinction as one of the top business plan startups in the world. In fact, the UA has sent five teams to the Rice finals since the competition was founded in 2001, more than any other school except one, Michigan with six, and more than schools such as MIT, Johns Hopkins, Harvard, Carnegie Mellon and even Texas.
Those five Rice finals teams are:
- Ozark Smoke ‘N Spice in 2001, which finished third out of just 12 teams in the competition’s inaugural year;
- Black Widow Tools in 2004, which finished second and included on its team First Security Bank President John Rutledge, then a UA student;
- BiologicsMD, which won the 2010 competition; and
- CycleWood and TiFiber, which finished fourth and sixth overall in 2011.
"Many teams have gone on to receive substantial funding from judges, even though they didn’t win the overall competition," said Brad Burke, managing director of the Rice Alliance for Technology & Entrepreneurship.
While SpatiaLink didn’t win over the Rice judges’ wallets, it got their attention and appears poised to land a big funding round.
"The judges at Rice said they were one of the best teams for the technology that they had seen," Reeves said. "They are trying to get the IP [intellectual property] developed and tied up. They have been invited to pitch to approximately 10 venture capital firms once they get the IP more developed."
Seeing Real-World Success
Agricultural Food Systems is an undergraduate startup that hasn’t competed at the national level (most national competitions are graduate level), but won the state Governor’s Cup in 2011 and placed second behind another JBU team, Craftistas, in that year’s Tri-State Donald W. Reynolds Cup. Tri-State matches the winners of state competitions in Arkansas, Oklahoma and Nevada, the primary states of the former Donrey media empire.
AFS is preparing to enter its own manufacturing phase of a product, TenderID, that some believe can revolutionize the meat industry.
"AFS addresses a real unmet need by combining technology with sound business strategy," said Jeff Amerine, technology licensing officer and entrepreneurship instructor at the UA and a consultant to Innovate Arkansas, which mentors many of the state’s business plan startups.
"I think they have a great chance at carving out a significant niche within the meat processing market by bringing automation to the meat tenderness scoring process. Their solution can replace an archaic and inconsistent approach currently dominated by visual inspection and human judgment."
AFS founder Lawson Hembree is confident big things lay ahead. He said the firm needs another round of funding to begin manufacturing and conduct more testing to confirm the product’s 100 percent accuracy in predicting tenderness in raw beef.
"Once that’s been completed, AFS can continue transforming the way food quality is measured," he said.
Amerine thinks CycleWood represents another business plan startup that will make it big.
"The CycleWood team illustrates how engineering talent with MBA education and entrepreneurial immersion from the Walton College of Business graduate program can parlay success in nationwide business plans into successfully raising venture capital," he said. "This past year, they raised $750,000 in venture capital from a Texas-based venture firm, and are currently working to validate their production processes."
Amerine said CycleWood "stands a real chance of changing the world" by replacing the plastic shopping bags that fill landfills with its biodegradable substitutes.
Amerine noted the potential of another UA startup, TTAGG. Its founder, Ryan Frazier, is a successful former business plan participant, but TTAGG itself didn’t start out as a business plan team. Written up in Forbes last year and last month in Fast Company, TTAGG monitors online purchase trends for companies through social media.
Movista, formerly MerchantView, is another UA startup that won the Tri-State Cup in 2008 and has translated its business plan success into real-world business success.
Movista provides software that tracks merchandise for retailers and plans to expand its product line beyond the retail sector. It has contracted with Tempur-Pedic and four other major national customers, said Movista’s co-founder and president, Stan Zylowski.
"Our goal is to have 4,000 users on our system by yearend, and we are on track to get there," he said.
‘Incredible Work Ethic’
The number of high-quality concepts and teams that are being produced in Arkansas continues to impress Reeves, a Georgia native. And it’s not just UA teams. Every four-year university in the state is producing business plan teams now. On the Governor’s Cup level, teams from JBU and Harding University have generated the most success. But the UA continues to crank out winning teams wielding winning technology and the savvy to translate that success into the business realm.
"Every year, I don’t think it will be possible to keep up the level of excellence that has come to exemplify Arkansas business plan teams," Reeves said. "And every year, I am wrong. I’m asked by faculty around the world why we are so successful. I think there are a few factors, the most important of which is our incredible work ethic."
Reeves said the school’s interdisciplinary teams were critical to real business success, and team members’ extensive interactions with former students and community business leaders, as well as the experience brought to class by the program’s managerial MBA students, are important.
She believes the general demeanor of Arkansas students is a "big attraction to judges and investors."
"Our students mimic much of what is great about Arkansans: We are confident because we are well-prepared, but we are humble," she said. "That is not common with many MBA and Ph.D. students."
Neither is the level of talent and expertise Arkansas teams seem to bring. Many business plan competitions post brackets not unlike those found at basketball tournaments. Last year at a competition in Louisville, Reeves said she walked by as the mentor for another team was checking out the bracket. "Oh no," Reeves overheard the man say. "We’ve got Arkansas in our bracket."
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