$1.7 Billion Raised: Data Shows Pitch Competitions Are Worthwhile

An alternative but viable source for entrepreneurs to raise capital

(Image: Thinkstock)
(Image: Thinkstock)

Pitch competitions are held across the country with the sole purpose of connecting entrepreneurs to a group of investor in hopes of securing seed money or early-stage funding. Investors can spot a good pitch in roughly the time it takes to ride an elevator from the top to the ground floor. Thus, the theory behind an elevator pitch or quick summary of a business idea or project plan that one would convey to a potential investor in an attempt to gain their support.

With the rise of pitch competitions in recent years, there also is a growing sentiment in the marketplace that the return on investment of elevator pitch competitions is not what they used to be. Meaning that it is not worth the time and energy to attend big events to seek investment for your startup or find the next interesting company for your portfolio if you are an investor.

RELATED: How To Come Out The Victor At Elevator Pitch Competitions

However, new data from popular trade show SXSW Interactive is proving this theory wrong in a big way. Since its inception in 2009, SXSW Accelerator (SXSWi’s pitch competition) alumni have collectively raised $1.748 billion, with 12% (31) of participating startups eventually being acquired by the likes of Apple (Siri) and Google (WearDrobe, reMail and Apture Highlights). Additionally, over 50% of Accelerator finalists have received funding to date, giving investors who got in early, when they were in startup mode, pretty healthy returns.

As the conference season nears and investors look to add companies to their portfolios in 2015, here are some tips on how to make the most out of pitch competitions.  According to Chris Valentine, who runs the SXSWi, here are five points  on what investors look for that make a pitching company a winner:

1) Creativity (Originality and uniqueness of idea).

2) Potential (Longevity, actualization and profitability of idea).

3) Goodness (How the product or service impacts/improves the world).

4) Functionality (Usability of interface for idea).

5) Team / People (Who is your team, and how will they make you a success).

For more than a decade, Black Enterprise has awarded $10,000 to the grand prize winner of its Elevator Pitch Competition, held at its annual Entrepreneurs Summit (May 13 -15, 2015, Hyatt Regency Atlanta). Call for nominations are now open for 2015.  For more information how to submit your video presentation, click here.