Startup competitions like the annual TechCrunch Disrupt in San Francisco have become high-profile incubators for nascent technology companies, separating the tech wannabes from the “unicorns” in the making. This April, five Chicago startups will head to Qingdao, China to compete in the Sino-US Innovation and Entrepreneurship Competition, which connects U.S. startups with Chinese investors.
A maximum of 20 U.S. companies and university teams will compete in the international competition, and already five startups from the Chicago area have been selected as finalists. Local startups Reliefwatch, Tovala, RiMO Therapeutics, Audiovert, and NETenergy received a paid trip to China after winning a regional competition held on Tuesday, Feb. 29 at the Chicago Innovation Exchange in Hyde Park.
In addition to 30 Chinese teams, participants from the University of Maryland, Virginia Tech, and San Jose State University will also compete. In April, the finalists will compete for $100,000 in prizes to help fund their ideas.
Startup competitions are just one of the new financing options entrepreneurs can use to get their idea off the ground. For instance, Audiovert, a finalist from Northwestern, raised $3,900 for its music tech startup on the crowdfunding site Indiegogo. RiMO Therapeutics, one of the other local finalists, was recently awarded $250,000 from the UChicago Innovation Fund.
Then there are organizations like Techstars, a global startup accelerator with a program in Chicago. Built in Chicago recently reported that Techstars Chicago graduate Infiniscene just raised $1.8 million for its cloud-based video game broadcasting service.
In the U.S., a quarter of all new businesses fail in their first year, while half will fail by their fourth year in business. Startup accelerators, competitions, and crowdfunding campaigns offer new ways for startups to raise capital in those crucial early years.
In the tech world, startups that go on to achieve a billion-dollar valuation are known as unicorns. Companies like Airbnb, Uber, Snapchat, and Pinterest are notable examples of this phenomenon. It’s an ambitious goal in a cutthroat industry, one that prizes innovation at all costs.
Yet because many of these startups are attempting to innovate on existing business models, that can make it difficult to perform traditional market research like benchmarking analysis. How do you compare your startup’s business model to the competition when there is no competition?
While there are more ways than ever for Chicago tech startups to raise capital, Infiniscene founder Stu Grubbs told Built in Chicago that ultimately, it’s old fashioned hard work that pays off in the end:
“Grubbs attributes much of the company’s success to its Midwestern work ethic, and the team’s passion for what they do. At Techstars, he said they got a reputation for coming in first and leaving last every day — including weekends.”