3 U. of I. teams finalists in business plan contest

The entrepreneurial spirit is flourishing at the University of Illinois.
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Three teams from the University of Illinois at Urbana- Champaign made the final cut in the first annual Carrot Capital Business Plan Challenge, a national competition sponsored by TD Waterhouse, Forbes magazine and HSBC Bank.

There were 215 plans submitted from more than 50 top business schools in the United States; 24 plans were selected as finalists, according to Carrot Capital Education Foundation associate Nicole Del Gadio. 'Only Georgia Tech, with four plans, had more finalists,' she said. Yale University, which has two finalists, was the only other school with more than one team chosen.

The foundation is coordinating the competition for the one-year- old Carrot Capital venture capital firm, based in New York City. The finalists will get an all-expense-paid trip to present their business plans in New York on 'Super Saturday,' April 27. The winning team, selected that day, will receive $50,000 in cash and a bona fide term sheet proposing an investment in the company by Carrot Capital 'up to $1 million depending on the needs of the company,' said Del Gadio. Three second-place winners will receive $10,000 each as a cash prize, and each of the remaining 20 finalists will receive $1,000.

'I think this is a reflection of the dedication of the University of Illinois to promote entrepreneurship and promote economic development through technology commercialization,' said Normand Paquin, associate director of the U. of I. MBA program's Office of Strategic Business Initiatives. Paquin said Carrot Capital identified campus coordinators in the top business programs and worked hard to promote the competition.

'I have never seen such an effort as this,' he said.

Laura Hirschfeld, marketing director for the Technology Entrepreneur Center at the U. of I., said the teams were helped significantly by the coaching of Mike Sandretto, a prominent visiting professor of accounting. 'We are also working to strengthen our ties between engineering and the business school,' she said of a new strategy at the university aimed at improving technology commercialization.

The U. of I. finalists are: INI Power Systems, which is based on fuel cell technology; Kim Laboratories, which developed a fast, low- cost salmonella test for the food processing and health care industries, and Ultra-Imaging, a start-up developing targeted drug- delivery systems.

More than 135 judges, including many CEOs and CFOs from emerging and Fortune 500 corporations, selected the finalists. Del Gadio said the teams that present their plans will benefit from their extensive new contacts with potential strategic partners and investors. Carrot Capital intends to make a documentary about the competition from the perspective of the start-up to be shown as part of promotional materials for next year's competition.

SurePayroll acquires Virtual Payroll customers

SurePayroll, a local start-up that provides outsourced payroll for companies over the Internet, increased its customer base by more than 5 percent by acquiring the customer base of Virtual Payroll, based in Florida. The company will announce the transaction today. The deal was for cash, according to senior vice president Michael Alter.

SurePayroll, established in 1999, attracted $8 million in an institutional round of financing in January of last year. The company has customers in all 50 states and primarily caters to small and medium-sized businesses. Alter said the 50-person company expects to break even within a year.

The key to its success?

'We keep it simple,' said Alter. 'We provide the simplest, most reliable and cost-effective service for payroll processing,' he said, adding that the company doesn't intend to stray from its core competency.

Venture-backed IPOs fall off a cliff

VentureOne Corp., a research organization based in San Francisco, delivered some obvious bad news last week: Predictions that the economy has recovered are premature. As evidence, only four venture- backed companies went public in the first quarter of 2002. In contrast, 56 companies were acquired or merged.

The real opportunities will come with a new wave of investments into defensible technologies and businesses, much like we are seeing with technology developed at universities.

Darcy Evon is editor of the i-Street Reporter, an independent free Internet newsletter and i-Street magazine. She can be reached at istreet@i-street.com.

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