Notre Dame-EGI Business Plan Competition: How to Define Success and Scale Investment

In the Fall of 2013, seven Notre Dame MBA students agreed to form a new type of business plan competition – one that would award one entrepreneur in a developing country $5,000 to fund his or her business idea.  Robert Meara is a first-year MBA student and a member of the business plan competition committee.

The objective seemed simple enough – take prize money that would have otherwise gone to a team of American MBA students and instead help an entrepreneur from a developing country start a business.  We had funding, a great team of motivated Notre Dame MBAs, and even a local partner in the Economic Growth Initiative (EGI) in Haiti (http://egi-haiti.org/).  Our ambition was to view this initial competition as a pilot, and if successful, begin to research ways to expand the scope of our efforts (to include expansion to additional countries).  However, as we began to work with entrepreneurs in Haiti, the team faced a number of different issues regarding the scope of our work.

Definitions of Success

In theory, it is easy to view success in terms of absolutes.  As business students, we initially believed that we should identify the ideas and entrepreneurs that created the greatest number of potential jobs, that had the greatest revenue potential, or that had the potential to create new and innovative business models.  Our team’s initial evaluation of the Haitian business plans that we received from EGI largely focused on these themes.  However, as we took part in our first video conference with the Haitian entrepreneurs, it became difficult to view the competition through the same, objective lens. 

Source:  https://www.facebook.com/253857444914/photos/pcb.10152055707914915/10152055707659915/?type=1&theater

Most, if not all of the business ideas we reviewed displayed creativity, ambition, and potential profitability, with ideas ranging from sandal manufacturing to computer lessons for Haitian school children.  It was tough to argue that there was a clear leader within that group, and further, that we should leave some of these ideas unfunded, particularly when each idea could provide significant benefit to their communities.  Should we choose the sandal manufacturer because we are confident he can achieve scale?  If so, should we pass over the opportunity to help develop an online platform to promote the local art scene?  Or forgo helping establish coursework in computer science for young, Haitian students?  In the ongoing debate regarding social entrepreneurship, Carl Schramm argues that all entrepreneurship is social and that simply by creating jobs and revenue, new businesses can facilitate development.[i]  As investors, is our responsibility, then, to pick the best business idea?  Or should we consider broader social impact?

Clarity in defining success is essential, and each of these questions underscore the fundamental issue facing socially-oriented investors looking to promote entrepreneurship in developing countries.[ii]  Do we focus on the depth of our involvement in a specific country or community?  Or do we try to make an impact in as many countries as we can?  Given that our team faces significant financial and human resource constraints, this decision will dictate the future of our competition, as well as the types of business ideas that we fund.

Factors Promoting Success

A brief review of current thinking regarding “success factors” in social entrepreneurship highlights the numerous challenges facing entrepreneurs in developing countries.  Articles from IISD, the SEED Initiative, as well as Patricof and Sunderland, point to the need for local infrastructure (from roads to capital), development of a large network of local partners, and a favorable business environment to facilitate successful investment.[iii][iv]  Likewise, these sources agree that entrepreneurs tend to be more successful when they have previous entrepreneurial experience, have received some level of education (specifically in business and marketing), and have the support of the local community.  While we believe our business plan competition may be able to provide some of the necessary capital and expertise, resource constraints limit our ability to provide on-the-ground support.

Source: http://egi-haiti.org/

As a result, choosing Haiti was fairly straightforward.  The University of Notre Dame has longstanding ties to development efforts in Haiti, and EGI, likewise, provided significant assistance in identifying qualified entrepreneurs, many of whom had received significant training from EGI to hone their skills in developing business ideas.  The ability to work directly with an organization that has already identified well-educated, entrepreneurial individuals contributed to the quality of business plans that we have reviewed to date.  Given the range of variables that factor into the success of entrepreneurial ventures, EGI has been critical to the success of our competition by helping entrepreneurs create a network of local partners, helping them navigate the Haitian business environment, and helping them validate their ideas within the community.  Additionally, EGI’s history of working with Notre Dame has been invaluable in ensuring our investment goes forward in good faith. 

Extending our competition to additional countries would thus require considerable effort on our part to identify potential candidate countries.  Regardless, it seems clear that working with local, partnering organizations is necessary, given their ability to help locate entrepreneurs that fit most, if not all, of the criteria above.  Identifying organizations like EGI in other countries will be essential if we decide to expand.

Conclusion

At the end of the semester, our team will be able to reflect on the success of our first business plan competition and shift our attention to the future.  The key question in the back of our minds is the same faced by investors in Harvard Business School’s Endeavor case[v] – should we focus on supporting several entrepreneurs in one country?  Or should we cast the net wider to identify disruptive ideas in others?

In coming to a decision, our team should not lose sight of the fact that we are already doing something good by helping our Haitian counterparts with funding and expertise.  Addressing the issue of scale by expanding our operations to different countries may dilute our ability to create a lasting impact in Haiti.  In my opinion, given the size of our team and our limited financial resources, we should focus on making EGI’s entrepreneurs the best they can be. 

Achieving depth rather than breadth will ensure that a larger number of the creative ideas that we have reviewed come to fruition, and through success, incentivize ideas with a social entrepreneurial mindset. 

Robby Meara

Notre Dame MBA Candidate (2015)

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[i] Schramm, Carl. "All Entrepreneurship Is Social." Stanford Social Innovation Review. Spring (2010): 21-22. Web.

[ii] Littlefield, Elizabeth, Mitchell Strauss, and Astri Kimball. "Stanford Social Innovation Review: Informing and Inspiring Leaders of Social Change." Creating a Future Impact Investing Strategy. Stanford Social Innovation Review, 20 Jan. 2014. Web. 04 Apr. 2014.

[iii] Patricof, Alan, and Julie Sunderland. "Venture Capital in Development." Session III: Does Size Matter? SME’s, Microfinance & Large Nationals. Proc. of Brookings Blum Roundtable. N.p.: n.p., 2005. N. pag. Web. 4 Apr. 2014.

[iv] Boyer, David, Heather Creech, and Leslie Paas. Report for SEED Initiative Research Programme: Critical Success Factors and Performance Measures for Start-up Social and Environmental Enterprises. Rep. Winnipeg: IISD, 2008.

[v] Sahlman, William A. "Endeavor: Creating a Global Movement for High-Impact Entrepreneurship." Harvard Business School (2010): n. pag. Web.