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  • 08.01.03

Final Exam

Can Wharton’s best pass the ultimate VC test?

Even in this dismal job market, a B+ average from Wharton guarantees its MBA graduates a better-than-average shot at a blue-chip career. But a B+ business plan? That will never make the grade. This spring’s Wharton Business Plan Competition, in which 271 aspiring entrepreneurs competed for $45,000 in prize money, proves that in today’s get-real economy, anything less than an A+ plan is sure to flunk out.

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That’s the consensus of the competition’s judges — seven senior executives and VCs from such firms as Goldman Sachs; Flatiron Partners; Johnson & Johnson; and Thomas, McNerney & Partners. On a rare sunny day in April, the judges gather in a third-floor classroom of Wharton’s opulent Jon M. Huntsman Hall. (The judges’ names have been withheld in exchange for a chance to spy on their deliberations.) In about an hour, they will announce the grand-prize winner. But first they must administer the VC test. The requirements: a bulletproof plan, a bright and tight message, and above all, an underserved market with a billion-dollar upside.

The rejection process is brutally efficient. Six finalists are dispatched with little or no disagreement. Soon just two remain: Biogenomix is pushing a process that uses therapeutic proteins to enhance blood platelets, which then seek out wounds in the body (unlike pills or shots); Paws is proposing health insurance for pets. Earlier in the evening, during the presentation session, Biogenomix managed to sell the technical merits of its plan without sounding like a scientific journal on tape, thanks mainly to presenter Hari Sundram, a charismatic medical resident. “But he’s not a full-time member of the team,” a judge points out. “The people who will run the company lack deep health experience.”

With that, Paws takes the lead. “They’ve identified an undeveloped market, and that’s rare,” a judge observes. Presenters Nastasha and Chris Ashton report that pets comprise a $30 billion industry in the United States. In the UK, 60 firms insure 10% of all pets; in the United States, less than 1% of pets are insured — by just five companies. This country’s pet-insurance market could be worth $2 billion.

The judges troop downstairs to a wood-paneled atrium that’s packed with smartly dressed students. Paws is pronounced the winner. Cofounder Nastasha Ashton hugs her husband and partner and takes the stage to accept the $20,000 grand prize. She gushes through an acceptance speech. The competition has concluded, but the critics aren’t finished. “I don’t want to be a jerk, but I wouldn’t fund any of these plans,” one judge declares as he surveys the crowd. Which says less about Wharton’s best and brightest — and more about how much the real world is going to expect of them.

Catch up with Wharton’s Business Plan Competition on the Web (www.whartonbpc.com).

About the author

Douglas McGray is a fellow at the New American Foundation. His last article for Fast Company, "The New Junk Food," appeared in the the April 2011 issue.

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