Tomorrow's tech stars

Startups operating on the cutting edge dominated our fourth annual student business plan contest.


(FSB Magazine) -- Ask today's youth what they'd like to be when they grow up, and the resounding answer is: an entrepreneur. Nearly 71 percent of teens want to start a business, according to a 2006 poll of more than 1,400 young Americans by Junior Achievement Worldwide, a Colorado Springs nonprofit that teaches entrepreneurship. That's up from 64 percent in 2004.

According to the Ewing Marion Kauffman Foundation, a group that promotes entrepreneurship education out of Kansas City, Mo., more than 2,100 colleges and universities now provide at least one course in entrepreneurship, compared with 300 in the mid-1980s.

wharton.03.jpg
Muscle men: Wharton's Alvarez (left) and Kothari plan to sell a plastic muscle that can move prosthetic limbs.
Photo GallerylaunchSee more photos
The Judges
Philip Bronner
is a general partner in Novak Biddle Venture Partners in Bethesda, Md.
Michael Greeley
is general partner of the venture capital firm IDG Ventures in Boston.
Kay Koplovitz
is principal of Koplovitz & Co., a media investment firm in New York City and founder of USA Networks.
Jennifer Fonstad
is a managing director of Draper Fisher Jurvetson in Menlo Park, Calif.
Verne Harnish
is the founder and CEO of Gazelles, an executive-development program in Ashburn, Va., for small and midsized firms.
Darryl Wash
is managing partner of Ascend Venture Group in New York City.
Stephen Watkins
is CEO of Entrex, a Chicago firm that helps investors conduct research and manage their interests in private firms.
Ann Winblad
is co-founding partner of Hummer Winblad Venture Partners in San Francisco.
Andrew Sherman
a senior partner in Dickstein Shapiro, a Washington, D.C., law firm, is CEO of Grow Fast Grow Right, a training consultancy in Rockville, Md., that advises fast-growth ventures.
Vote for your favorite! Which business idea from which school do you think is best?
  DC50 surveying tool, BYU
  ExpertBee.com website, Columbia
  Group home, Gonzaga Univ.
  Verge Records label, NYU
  Laparascope defogger, Ohio State Univ.
  Framecaster video technology, UC-Irvine
  In-vitro fertilization procedure, UCLA
  Collectica online community for collectors, Univ. of Chicago
  SecureSurfer web security products, Univ. of Georgia
  Online listings of local rentals, Univ. of Iowa
  Cash2Bet.com, Univ. of Miami
  MuscleMorph devices for artificial limbs, Wharton
or View results

It is not only the young who have caught the fever. More and more managers and professionals are seeking MBAs to learn the skills to launch a new business. "You're seeing a reflection of the changing demographics of students," says Andrew Sherman, a partner at the Washington, D.C., law firm Dickstein Shapiro and an adjunct professor of entrepreneurship at the MBA programs of Georgetown University and the University of Maryland. "They are getting more job experience between college and an MBA."

This groundswell of enthusiasm for all things entrepreneurial helps explain the rich selection of student business plans submitted to this year's FSB Student Showdown, our fourth annual competition. Thirty-eight teams from top universities and business schools across the country competed in our All-Star contest, after qualifying by winning the business plan contest at their school (or a competition open to more than one school). Each entry then had to pass muster with our panel of nine judges, which included entrepreneurs, venture capitalists, consultants and an academic.

In the best tradition of bootstrapping, all three of this year's winners raised their own capital to fill untapped niches that their founders spotted in the marketplace. MuscleMorph, a team from the Wharton School of the University of Pennsylvania, claimed first place. It is developing a muscle-like device made of plastic to replace conventional motors in prosthetic limbs. Our second-place team, Brigham Young's Precision Surveying Solutions, created a prototype of a wireless handheld device that boosts the productivity of land surveyors. Coming in third, Ohio State's Minimally Invasive Devices developed a tool that makes surgery safer and cheaper.

For more on this year's student business stars, read on.

Giving amputees new hope

First Place: MuscleMorph

WHAT IT DOES: Makes an artificial muscle that powers prosthetic limbs

FOUNDERS: Rodrigo Alvarez, 31; Howard Katzenberg, 28; Rahul Kothari, 30

DATE LAUNCHED: April 2006

STARTUP CAPITAL: $26,000 in prizes from business plan contests

As a youngster in Mexico City, Rodrigo Alvarez spent a lot of time tinkering with the machines at his family's plastic bag plant and helping his father boost production. "That factory was my playground," Alvarez recalls. "That's where I learned to be inventive."

Now Alvarez is hoping that talent will pay off. While working on his master's degree in bioengineering at the University of Pennsylvania, he created a new kind of flexible artificial muscle made of plastic. With two MBA students from the university's Wharton School, Rahul Kothari and Howard Katzenberg, Alvarez launched MuscleMorph, which aims to use that artificial muscle to transform the prosthetics industry by providing a new way to move artificial limbs.

Much like a human muscle, Alvarez's device is composed of thousands of strands of microfibers, which respond to electrical charges from a battery by contracting smoothly and silently. In the lab, the founders claim, MuscleMorph's prototype has proved as strong and as responsive as human muscle. The company holds two provisional patents on the technology.

MuscleMorph's device comes at a critical time for the prosthetics industry. There are about 1.8 million amputees in the U.S., and their numbers are expected to increase because of a rising incidence of heart disease and diabetes.

Several motorized prosthetics have come on the market in the past year, but they are bulky, noisy, and power-hungry machines that cost between $50,000 and $100,000. Limbs using MuscleMorph's technology will have more lifelike motion, could cost significantly less - and will be completely silent, claims Kothari. "No one wants to sound like a cyborg," he says.

To speed its path to market, MuscleMorph is seeking $1.5 million from angel investors. It already faces some brawny competition. Artificial Muscle in Menlo Park, Calif., was spun off in 2004 from SRI International, one of the world's largest contract research institutes, and has attracted about $10 million in venture capital. Last January, Artificial Muscle introduced its first "muscle," using technology similar to MuscleMorph's. However, this rival says it does not intend to focus initially on the prosthetics market, but on the consumer electronics, automotive, and industrial markets, leaving MuscleMorph with a good shot at putting millions of amputees back on their feet. --Patricia B. Gray

A wireless gadget makes mapmaking easy

Second Place: Precision Surveying Solutions

WHAT IT DOES: Produces a wireless handheld device to help land surveyors gather data

FOUNDERS: John Evers, 41; Adam Robertson, 34; Tim Wessman, 24

DATE LAUNCHED: January 2006

STARTUP CAPITAL: $80,000 in personal savings, plus $20,000 in prize money from business-plan contests

The short story is that I wanted to go faster," says Adam Robertson, explaining why after seven years he left Hewlett-Packard spinoff Agilent Technologies, a maker of instruments and measurement devices, to attend business school. He held a good job at Agilent as a manufacturing and product-development guy, but felt stymied. "I had made proposals to management that they determined were beyond their scope," he says. "I lacked permission to proceed or the autonomy to do it myself."

An old story, but Robertson was luckier than most. One week after he gave notice, Agilent floated a lucrative voluntary severance offer. He grabbed it, sold his house in Santa Rosa, Calif., and moved with his wife and five children to Provo, Utah, where he enrolled in Brigham Young University's Marriott School of Management in the fall of 2005.

From day one of B-school, says Robertson, his focus was on finding the right vehicle for his entrepreneurial ambitions. He had vetted several ideas when he heard Tim Wessman, a software engineer and BYU undergraduate, describe his business in a BYU elevator-pitch competition, in which students have only a few moments to sum up their business model as if pitching it to a potential investor during an elevator ride.

Wessman's brainstorm: a company that would manufacture and market a new generation of handheld devices for land surveyors. Robertson was hooked and soon joined Wessman's team, which also included John Evers, an experienced professional surveyor. Together they launched Precision Surveying Solutions (http://pssllc.com).

By last summer Precision had introduced a beta-tested prototype for its first product. The DC50 is a modified Hewlett-Packard (Charts) calculator, encased in a sturdy shell, that runs custom land-surveying software. Many land surveyors rely on programmable, handheld calculators to gather data used in creating maps and deeds, but the gadgets function slowly and crash often, according to Precision. By relying on software that pares down the tasks to the basic ones, the DC50 - the only non-Windows based product of its kind - promises to speed data collection and to increase productivity by as much as 40 percent. Robertson projects sales of $2.3 million for 2007.

Precision seems to be well on its way to achieving that goal. Besides having a unique idea, the startup has an unusually strong team, says judge Michael Greeley, general partner of IDG Ventures in Boston. In Evers, Robertson and Wessman, Greeley sees "very relevant backgrounds to design, prototype, deliver and distribute the product."

Angels and VCs are calling, but Robertson says he's in no rush to bring in outside capital, preferring to bootstrap the business. The team already has another new product in the pipeline. Robertson won't say what it is, but adds, "We expect to continue innovating in the surveying field." And then? Robertson sees more startups in his future. "I want to prepare myself for future leadership roles in the business world, my community, and my church," he says. Then he ends the interview to go ride bikes with his 5-year-old daughter, Ruth. --David Whitford

A tool that speeds surgery

Third Place: Minimally Invasive Devices

WHAT IT DOES: Makes a device that defogs surgical optical scopes

FOUNDERS: Caroline Crisafulli, 40; Wayne Poll, 50; Jodi Wolfe, 28

DATE LAUNCHED: January 2006

STARTUP CAPITAL: $200,000 in founders' funds and business-plan prize money, plus $700,000 in angel funding

As a urologist who specializes in treating kidney cancer, Wayne Poll often performs laparoscopic surgery at Riverside Methodist Hospital in Columbus. He operates deep in the abdomen for as long as six hours through an opening no bigger than a keyhole. One of his biggest frustrations: his instruments. He has to remove his laparoscope - a slender steel optical instrument that allows surgeons to see inside the body - for cleaning and defogging six to seven times an hour. Removing it lengthens the time of surgery and heightens the risk.

For years Poll pleaded with medical-device companies for a solution. But he isn't waiting any longer. Earlier this year Poll, along with his partner Caroline Crisafulli, the office manager for his surgical practice, launched Minimally Invasive Devices at TechColumbus, an incubator loosely associated with Ohio State. The incubator assigned Jodi Wolfe, a former pharmaceutical saleswoman who is working on a master's degree in healthcare administration at Ohio State, to work on market research.

Their product, called Clear-VU, reduces fogging by heating the laparoscope and by applying a plastic film over its casing that helps prevent further condensation. Poll figures his antifogging device could cut time in the operating room on the most common, one- to two-hour operations by as much as 20 percent. "Shaving ten to 15 minutes off total operating time would be a very significant savings for hospitals," he says, especially when you consider that operating room time alone costs on average $1,000 an hour, not even counting the salaries of the doctors.

Poll and his co-founders have already developed a prototype and filed for patent protection of Clear-VU. The company estimates that the device would probably sell for between $100 and $150. The trio intend to file with the FDA for approval of the device by mid-2007.

Their timing is auspicious. Minimally invasive surgery is one of the hottest trends in medicine. In the U.S. alone, surgeons will perform 4.4 million of these operations this year, up from just a handful in 1990.

"Very little has changed since the first minimally invasive surgeries in the early 1990s," says Poll. "The tools we use are still remarkably crude." All the more opportunity for this surgeon-turned-entrepreneur. --Patricia B. Gray

The runners-up

Besides our winners, we had nine runners-up, all with enticing business plans. Here are three; for the rest please go to fsb.com/showdown.

A safer Web: Founded at the University of Georgia by veteran computer product developers, Internet Security plans to market a suite of products that blocks viruses and prevents sensitive information such as passwords from being monitored during online transactions.

Better test-tube babies: Precision Reproduction, which won UCLA's business plan contest, has developed a procedure for in vitro fertilization that it says will eliminate the incidence of ectopic pregnancy and reduce the chance of women having high-risk multiple births.

Global hip-hop: An independent label from New York University, Verge Records (www.verge-records.org) is betting on a healthy market in the U.S. for international hip-hop artists such as Brazilian rapper BNegao and his band. It plans to release its first CD next spring.

Do you agree or disagree with our three winners? Want to share your views on a particular plan? Are business plan contests a helpful exercise for would-be entrepreneurs? Would you fund one of the businesses selected? Let us know what you think by writing to us at fsb_mail@timeinc.com.

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Small companies that play big

12 startups to launch now

How we chose the winners Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.