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First, know that the prize amount, no matter what it is, will not be enough for the venture; prize money is simply a jumping off point for the team. Next, you need to determine whether the prize will be monetary only or a combination of money and services (legal, consulting, other). All services need to be vetted to ensure quality, as poor services will reflect more on the competition than the service provider.
Providing money only can be simple and clean. You ask the finalists to complete a distribution of funds form before the finals, and this form identifies how the money is to be distributed should the team win. This is done to prevent team members from changing their minds after the team wins a prize.
The amount of the prize is somewhat dependent on how much the competition has raised in funding. For example, in order for the UC Berkeley Business Plan Competition to give a $50,000 first prize, $25,000 second prize, and $10,000 third prize, the competition needs to raise in excess of $120,000. The Berkeley competition actually lowered its prize money to $25,000 for first place for two reasons: one, the difficulty of raising enough funds to cover all costs each year, and two, judges felt that the total prize money going out was needlessly large.
(Note: the UC Berkeley competition received 100% more business plans the year after the competition decreased the prize money, which is an indication that entrants don’t necessarily feel that prize money is the only benefit in competing.) |
