Starting a business from scratch is a risky endeavor. But with mentorship from top Wharton faculty and the incentive of a $25,000 cash prize, almost 200 Penn students each year come up with a plan and run with it.
Through Wharton's Business Plan Competition, initiated in 1998, Penn students from different undergraduate and graduate schools -- with the help of some people outside the University -- go through the various stages of planning a business. The budding entrepreneurs form groups and seize the opportunity to work through their ideas and get feedback on them.
The projects are judged by executives from the top venture capital firms across the country. The ultimate goal of many submissions is to gain media exposure for the potential enterprise.
The semi-finalists in the competition were announced earlier this month, and participants are currently working on extensive explanations of their plans.
On March 7, Wharton graduate students Jason Breemen and Raj Venkataraman, along with Economic Inventions representative David Gleeson presented their idea for a patented expiration-less stock option.
An option is the right to buy a certain stock or security, and many executives receive options as part of their benefit package. As opposed to normal options, which are only effective for a set period of time, a group of 14 students -- including Breemen and Venkataraman -- and two professionals have been working on a system that will allow the holder of the option to maintain the protection of that option indefinitely.
Out of the 16 people involved, only five are actually entered in the competition. Two professionals -- Gleeson and Vergil Daughtery -- and three students -- Breemen, Arun Kohli and Lenka Dewa -- make up the BPC team.
The group has been working on this project ever since Gleeson and Daughtery from Economic Inventions pitched the idea on the Penn campus in November 2000. The interested students stepped up to help develop the proposed concept, hoping to bring the product to the marketplace.
"With a time-stripped option, where there's no set expiration date, you can keep the protection in place as long as you'd like to have it," Breemen said.
The group, planning to put their business plan into action in the near future, is hoping that their idea will be eventually be listed on one of the major national stock exchanges.
"If all goes well, the American Stock Exchange will agree to list the product for trading," Breeman said. "And if things don't turn out the way we hoped, we still have opportunities with the Philadelphia Stock Exchange and the Pacific Stock Exchange."
Breemen said the group received positive feedback from their meetings on Wall Street, and he believes that the project has a bright future.
Currently, the team is being called BKB Global Ventures, and the group is hoping to gain status as a limited liability corporation in the near future.
Breemen added that the Mass Mutual insurance company has also expressed interest in the product being developed by the group.
While not all ideas in the Business Plan Competition will actually come to fruition, Breeman said he is confident that this business will succeed. The group is using the BPC as a means for gaining exposure and feedback for a plan that they will soon be implementing.
On the other hand, some BPC participants see the competition as an opportunity to learn what it takes to start a business and are less interested in carrying out their plans.
Graduate students Andrew, Laura Sparks and Melanie Baur are working on a non-profit school management company. Andrew Sparks said the three students -- all of whom are interested in education -- came up with a few ideas and submitted them all to the BPC before they decided on their final plan.
"It would be an organization that would go into schools and try to work more collaboratively with the existing staff," he said. "It seems like, to us, a lot of the companies that are trying to work with public schools act like they have all the right answers, and I think our company would take a little more thoughtful approach to working with the schools with more of a long-term focus."
In part, the business plan is a response to the current overhaul and proposed takeover of the Philadelphia school district by Edison, Inc., a for-profit company.
"The situation in Philadelphia has definitely raised people's awareness of the role of school management companies, so it did play some part," Andrew Sparks said, adding that he has noticed problems with the existing for-profit school management programs.
"A lot of for-profit companies have come on strong, and sometimes don't seem to have a strong understanding of the culture of public schools and the political nature of public education," Sparks said. "I think they're coming from a different perspective and looking for quick solutions. That may not be possible, especially in underfunded urban public schools."
Andrew Sparks, a Graduate School of Education student, said he has learned a lot about the business world through the BPC.
"For me, as an education student, I have learned quite a bit about developing a business proposal, and it's also been fun, although a lot of work at times, working on this project," Sparks said.
This year, Goldman Sachs is funding a special prize for BPC entries in the education track, and Sparks' plan will qualify to receive that award.
The Venture Fair, the culmination of the BPC at which the winners of the competition will be announced, will be held on April 22.
