Monday, May 12, 2008

ATG names MinuteBank the $50K winner of business plan contest

By Keith Regan

A business plan that enables prepaid mobile customers to bank their online minutes took the $50,000 top prize in a business plan competition sponsored by Art Technology Group Inc., which raised eyebrows as a corporation sponsoring an event more often associated with universities.

Cambridge-based ATG named MinuteBank the winner of what the company is billing as its first e-Commerce Ingenuity Business Plan Competition. MinuteBank, a plan being developed by students at the University of California Berkeley's Haas School of Business, lets prepaid mobile users create personal mobile minute accounts that could be used in mobile commerce applications. MinuteBank also won a $10,000 prize as the public's choice based on votes cast at ATG's annual user event, known as "Insight Live."

Once almost exclusively the purview of MBA programs, startup competitions are becoming more and more common, noted Michael Greeley, a general partner at Flybridge Capital Partners in Boston and president of the New England Venture Capital Association.

"You can't turn around without bumping into a competition," Greeley said. "At a high level, any dialogue is productive, but I think entrepreneurs need to question the motives when a company is doing a business plan competition when they don't have a captive fund they're making investments through."

More businesses are sponsoring similar competitions, though the trend is more common in Silicon Valley. Greeley said he has had conservations with several companies interested in partnering with venture firms on something similar. Several states, including Wisconsin and Rhode Island, offer competitions as well, said McRae Banks, a professor of entrepreneurship & strategy, and head of the management department at Worcester Polytechnic Institute.

"A lot of businesses have talked about it, but they come to the conclusion they're not in the position to do that," Banks said. "They don't have a wide enough reach for the most part or it doesn't make sense for them to go this route."

ATG announced its contest in October and announced in January that MinuteBank was among four finalists along with a user-generated ad site, a visual marketing and search engine and an e-commerce ratings tool. Cliff Conneighton, the senior vice president of marketing at ATG, said while the company doesn't typically invest directly in startups, it has an extensive partnership program and over the years has often acquired smaller firms with complementary e-commerce technologies.

And while some might suggest that a company would use a business plan competition as a supplement to the more costly research and development of new products and ideas, ATG continues to spend robustly on R&D. According to its most recent annual report, R&D spending at the company topped $24.9 million in 2007, up from $21.5 million the previous year and $18.5 million in 2005.

"We did not sponsor this contest with the intent to identify an acquisition target," Conneighton said. "We simply wanted to give others a platform for stirring up the market with fresh e-commerce ideas and help those companies by introducing them to potential investors, partners or clients. ATG doesn't gain any access or ownership in MinuteBank, but we will be watching its development and keeping track of its progress."

Conneighton said the ATG competition stands out because of its focus on the e-commerce niche.

"Despite how vital e-commerce has become to the U.S. and global economies, we were surprised that no company had previously sponsored anything like this, without having a direct tie to their own products or services," he said.

Keith Regan is a freelance writer in Grafton.