PURPOSE OF PROGRAM
To encourage the founding and growth of high-potential new ventures founded by UChicago College students.
- Entries must be the original work of the entrants and may be made by a single-student or by multiple-student teams. Each team or student may submit as many entries as they wish. However, it is unlikely that multiple entries from the same team will be successful given that the plans are judged partly on the ability of the team to execute the plan.
- The new venture idea should be original and have commercial promise. The entry may be developed in conjunction with a course or research project, and students may enlist faculty aid.
- Teams that have secured arrangements for capital from any source must disclose the amounts and sources in their Phase I executive summaries. Entries that have received more than $500,000 of institutional investment are ineligible to compete.
- There is no minimum or maximum team size. However, each team is required to have at leastone currently registered student from The College at the University of Chicago as an active member of the team. To qualify, the UChicago student must be registered as of the Phase I deadline.
- Teams whose founding members are unaffiliated with the University of Chicago are only eligible to apply to the CNVC if they have a current UChicago College student as an integral part of their team, with a 10% equity stake in the venture.
- Teams may have members who are not affiliated with the University of Chicago. The Polsky Center encourages teams to identify individuals, within and external to the University, who may contribute the additional expertise and experience to help the team succeed.
- Upon acceptance into the CNVC, at least one team member must enroll in the CNVC course (BUSN 20340: Developing a New Venture) at Chicago Booth in the winter quarter.
- First-year students are not eligible to enroll in the course for credit, but can audit the course as a member of a CNVC team.
- Ventures can be either for-profit or non-profit. Teams do not have to have incorporated to apply or participate, but prize money is always granted to the entity and not individuals, so incorporation will be necessary to claim investments or grants.
As a condition to receive the prize money, each winning team must agree to provide the Polsky Center with equity in the company (that was the subject of its application). The Polsky Center offers a non-negotiable version of the Simple Agreement for Future Equity (SAFE) for companies that receive prize money.
SAFE is a standard convertible equity investment instrument first introduced and used by Y Combinator for seed funding. Fundamentally (and ideally), it is an investment that converts to preferred stock at the occurrence of the next round of funding and at the same terms as that round of funding. The Polsky Center may also adopt the terms (market rate) of SAFEs issued after the Polsky Center’s. It is not traditional preferred stock or a convertible note. It is intended to replace convertible notes by keeping a similar conversion mechanism but removing many of the problems inherent in debt instruments (e.g., interest, maturity dates, risk of insolvency, and subordination). Importantly, SAFE is unlike preferred stock in that it does not require setting a valuation of the company — that determination is postponed until the later “occurrence of a particular event”.
Judging will be based on the commercial potential of the business, innovative nature and technical feasibility of the idea, the credibility of the projections and assumptions, the ability of the team to make it happen, and the social impact of the business, if applicable. While the quality of management and advisors is important, it will be less of a factor in Phase I and more a factor as the team progresses to Phase III. All decisions of the judging panel will be final.
PRIZES & EQUITY AGREEMENT
Cash prizes, along with any additional goods and services, will be divided among the top teams as deemed by the judging panel. The allocation of the prize money will be determined by the finals judges, based on relative merit and need. Each CNVC finalist must review the terms of the SAFE agreement provided by the Polsky Center. As a condition to receive an award, each winning team must agree to provide the Polsky Center with equity in the company (that was the subject of its application) in an amount equal to its respective award if the company receives funding or otherwise enters into a business combination transaction wherein the surviving entity receives financing or equity in another entity. Non-profit entities receiving prize money will receive the funds as a grant to the entity. Teams will have six months from the CNVC finals date to claim the prize funds.
PROTECTION OF INTELLECTUAL PROPERTY
The University of Chicago, the principal sponsor and organizer, the co-organizers and co-sponsors of the College New Venture Challenge have taken all reasonable measures to assure that all contestants retain their rights to the Business Plan and Intellectual Property. The co-sponsors and judges of the program include non-University of Chicago organizations that are interested in fostering the entrepreneurial process. Some of these organizations are in the business of working with and investing in the ideas of entrepreneurs. However, co-sponsoring organizations will only have access to the Plans with a team’s prior approval and shall make no claim to any of the property or rights.
The protection of these rights is the ultimate responsibility of each contestant. Contestants are urged to mark as CONFIDENTIAL any portion of their entries, which they consider to be proprietary, or of a sensitive nature. Contestants should be careful about disclosing any “patentable” concepts in their entries because, although in the United States a patent application can be filed up to one year after the first public disclosure of an invention, in many foreign countries a patent application must be filed before any public disclosure is made=
WAIVERS AND RELEASES
The University of Chicago, each of the co-sponsors, judges, mentors, co-organizers (the “Competition Officials”) and its directors, officers, partners, employees, consultants and agents (collectively “Organizer Representatives”) are volunteers and are under no obligation to render any advice or service to any Contestant. The views expressed by the judges, co-sponsors, co-organizers, and the Organizer Representatives are their own and not those of the University of Chicago Booth School of Business or any person or entity. Entrepreneurs will be asked to acknowledge and agree to this in the application process.