IT Innovations Dominate 2012's 'Great Eight' Business PlansPublished: May 01, 2012 in Knowledge@Wharton
Since launching around the height of the dot.com bubble of the early 2000s, Wharton's Business Plan Competition has seen ever increasing diversity in entries from student entrepreneurs. This year, a big theme was IT solutions for business problems, especially in the health care field. Finalists' plans focused on software to connect hospitals with patients in rural areas, a program to identify patients at high-risk for readmission to a hospital and a professional social networking site for physicians. In non-health care entries, contestants presented ideas related to areas such as online marketing and education.
The BPC has been a popular competition among students at the University of Pennsylvania since it was established 14 years ago. This year, it saw a record level of participation, with more than 150 ideas submitted to the competitive phase -- a 30% jump in participation over 2011. During the course of the year, ideas were narrowed down by a broader group of judges until the "great eight" remained to participate in the Venture Finals on April 25.
Presenting their plans before an audience of venture capitalists, business leaders, faculty and students, the eight finalists fielded questions from four judges on aspects of their plans such as revenue models, intellectual property and the competitive landscape. The judges included representatives from Alara Capital, Karlin Asset Management, Compass Partners and Spark Capital.
The team judged to have the most viable business plan was named the first-place winner and received the $30,000 Michelson Grand Prize. The second-place winner received $15,000 and the third-place winner received $10,000. In addition, audience members voted to decide on the winner of the $3,000 People's Choice Award and students voted (a week prior to the event) on the winner of a $3,000 Students' Choice Award.
See if you can pick the top winners by reading the summaries of the business plans below. The results are listed at the end of the article. Don't peek.
According to Sharp and team member Ryan Urban, it is problematic for sites to have visitors simply "peek in the door for 30 seconds and then leave." As a result, digital ad units are losing value, and ad space is in greater supply than demand. However, Sharp and Urban maintain that larger ads shown at the moment before a bounce have a higher click through rate compared to typical banner ads. With low operating costs, a fully developed product and an easily installed program, the team predicts more than $750,000 in revenues by the end of 2012 through a revenue-sharing model.
Calcula: Despite 2,500 years of medical advancement, one disease specifically mentioned in ancient versions of the Hippocratic Oath still burdens our society today: kidney stones. Team leader Evan Werlin, a medical student at the University of Pennsylvania, explained that in the U.S. each year, there are two million patients with kidney stones, which leads to 1.1 million emergency room visits, five million missed work days, and nearly $6 billion in costs to the country's health care system. In addition, guidelines stipulate that current therapies are only used for stones larger than 10mm, leaving 85% of patients untreated for this painful disease. Calcula plans to address that problem using a newly developed catheter device to remove those smaller stones without anesthesia in a doctor's office in 15 minutes.
Werlin and his team discussed how the device, which costs $275, could be used to help this "huge market" of currently untreated patients. With three provisional patents filed and an existing reimbursement code in place for insurers, the group estimates that there is a $400-million a year market in the U.S. Adding the European Union, the market exceeds $1 billion a year.
ChondroPro BioSciences: Osteoarthritis is a disease that affects one in two Americans at some point in their lives, and it is becoming more prevalent as the population ages, according to team leader Jamil Beg, a Wharton second-year MBA student. This adds up to an enormous cost for the U.S. health care system -- around $850 billion a year in direct and indirect costs. Current treatment options for knee osteoarthritis don't address the cause of the disease, but instead treat the symptoms with pain killers and cortisone injections. In severe cases, doctors resort to knee replacement surgery.
ChondroPro BioSciences is focused on a disease-modifying therapeutic technology to treat the disease. Its drug would be injected directly into the knee to prolong the time before joint replacement is required or to completely prevent that procedure. With each knee treatment costing $1,200 and an established reimbursement framework, the team predicts peak sales of $2.5 billion by 2025.
Grand Round Table: While there have been amazing medical advances in recent years, such as the dramatic prolonging of life for HIV patients, it still takes considerable time for medical discoveries to make it into clinical practice, according to team member Eric King. To speed up the process of knowledge sharing among physicians, King and team leader Kristy Leong, a Wharton first-year MBA student, explained how Grand Round Table will provide a professional social networking platform for physicians.
The goal is to share medical knowledge in secure round table discussions organized by topic, and also to aggregate and organize information. By charging membership fees for premium access, as well as offering advertising opportunities on the site, the team estimates that potential revenues could reach $550 million. They added that they have a patent pending and plan to launch the product in the fall.
Graphene Frontiers: Graphene is stronger than a diamond, more conductive than copper and you can see right through it. The substance, which is made by chemically processing graphite (the source of "lead" in pencils), has been described as the "miracle material of the 21st century," according to team leader Mike Patterson, who is a second-year Wharton executive MBA student. However, it is currently very difficult to make. Graphene Frontiers plans to use a unique atmospheric pressure chemical vapor deposition process to enable high-quality, low-cost production at industrial scale.
Patterson explained that graphene manufacturing presents a multi-billion dollar market because it could be used in a diversity of products, such as flexible circuits, solar cells for rooftops, and touch screens. Several companies are now testing the startup's materials, and its technology is available for licensing. Graphene Frontiers was selected by the National Science Foundation as a recipient of its NSF Innovation Corps Awards.
1DocWay: Going to see a doctor is time consuming. In addition to making the appointment and driving to the office, there is often paperwork and a long wait. That process is even more challenging for the 50 million Americans who live more than 60 miles away from a specialty physician as well as the elderly and disabled. 1DocWay seeks to improve that process by providing what it calls an "online doctor's office" to connect hospitals with underserved patient populations. Using a secure video chat platform, the company helps hospitals expand their services and increase their referral bases while increasing access to specialists.
The company is currently focused on psychiatry services delivered to rural areas, estimating that more than 85% of those outpatient visits could be conducted online and are reimbursable for most major insurance payers, according to team leader Samir Malik, a Wharton first-year MBA student. He added that the telemedicine market is expected to reach $27 billion by 2016.
Malik spent last summer developing the business at Dreamit Ventures in New York. So far, he has created partnerships with clinics and facilitated 330 consultations, resulting in four inpatient referrals. The company also is a member of Wharton's Venture Initiation Program.
QMagico: There are 40 million kindergarten through 12th grade students in Brazil, but most of them don't have access to the education they need, said team leader Claudia Massei, a Wharton second-year MBA student. At the same time, an increasing number of young people now have access to the Internet, especially as the government has invested in equipping Brazilian schools with computers. QMagico seeks to utilize kids' access to the Internet by providing high-quality academic content that would complement classroom learning. In addition to videos, the QMagico site contains interactive exercises, individualized performance reports and a crowd sourcing platform to enable students living in different regions to connect with each other.
Some of the site's content is free, but premium content is available only with a monthly subscription at a low price. A beta version is launching soon with more than 1,000 users. Targeting 50,000 users by the end of this year, the venture predicts it will have 900,000 users by the end of 2015. Massei noted that the e-learning market in Brazil is growing at a rate of 15% per year and will soon represent a market worth $15 billion.
RightCare Solutions: When two patients are admitted to a hospital today, there is no way to know which one has the higher risk for being readmitted within 30 days of discharge. Since hospitals are not reimbursed for patient readmissions within that time period -- and can even face financial penalties for readmissions -- the situation presents a challenge for hospitals. Indeed, this is a $30-billion problem in the U.S., according to team leader Eric Heil, a Wharton second-year executive MBA student.
Based on research by Kathy Bowles of the University of Pennsylvania School of Nursing, an expert in the field of discharge planning and transitional care, RightCare Solutions offers a software program that can help identify which patients are at high risk for readmission. The evidence-based decision tool is used by nurses at the point of admission to identify those patients, allowing caregivers to focus on their medical needs and coordinate follow-up care to reduce the chances of readmission. The company has completed its first case study at a major hospital where it showed a significant reduction in 30-day readmissions when the tool was used.
The venture was recently selected as a top three finalist in the Janssen Connected Care Challenge and was one of the top 30 university startups in the U.S. selected to present at the University Research and Entrepreneurship Symposium in Boston, Mass.
And the Winner Is ...
RightCare Solutions won the Michelson Grand Prize. Second place was awarded to 1DocWay, and third place was awarded to Calcula. The People's Choice Award went to ChondroPro BioSciences and the Students' Choice Award went to QMagico.
RightCare Solutions includes three second-year students in Wharton's MBA Program for Executives in Philadelphia. After Heil, a venture capital associate at Domain Associates, pitched the idea in a Wharton Venture course, he was joined by classmates Matt Tanzer, an associate director at Shire Pharmaceuticals, and Mrinal Bhasker, vice president of technology and principal at Audacious Inquiry.
Heil says that the team's next steps involve completing financing, hiring several full-time employees and installing their product at three to four major institutions. The business will be based in the suburbs of Philadelphia.
Malik noted that 1DocWay is currently earning $6,000 a month in revenue and all of the founders are working full-time on the venture. Their immediate goals are to sign on additional hospitals as clients, build a well-rounded advisory board that spans health care technology and startups, and possibly move the business to New York City because of its "strong and supportive environment for early-stage entrepreneurs."
As for Calcula, Werlin says that his team has been approached by several people about potential investments in the company. In addition to seeking funding, the team is looking to establish efficacy in an animal study before establishing efficacy and safety in a human study. Some of the members plan to pursue the venture full-time in the San Francisco Bay Area. However, Werlin is a rising fourth-year medical student and is committed to continuing his medical training.
If history is any indicator, the BPC winners are off to a good start. The competition has helped launch many successful businesses. Recent examples include Stylitics, which won the grand prize last year and was a "The Next Big Thing in Tech" nominee for the Fashion 2.0 Awards, Baby.com.br, which won third place last year and was named a top-10 startup in Brazil by Business Insider and is the largest e-commerce retailer in the baby space in Brazil, and Warby Parker, which was a semifinalist in the 2009 competition, and continues to disrupt the eyeglasses industry by offering fashionable glasses online at discount prices.