A look back at the history of the state’s premier business-plan competition
For 20 years, the Arkansas Governor’s Cup has been challenging college students throughout the state to think creatively as they develop their business ideas in a high-stakes competition. The program has worked to drive entrepreneurial interest among college students and spur economic growth in Arkansas.
Founded in 2001, the Governor’s Cup has become a calling card for the state and a flagship program for the Arkansas Capital Corporation (ACC) and its nonprofit Arkansas Economic Acceleration Foundation. “Frankly, it’s one of the greatest and one of the most successful accomplishments that we’ve had here at ACC in terms of the profound impact that it’s had on the entrepreneurial ecosystem in Arkansas,” ACC CEO Rush Deacon said.
Undergraduate and graduate students who participate in the Governor’s Cup must develop a business plan for a new venture, tackling all aspects of what goes in to creating a sustainable business. Throughout its history, Governor’s Cup has served as an incubator for multiple notable Arkansas companies, including Picasolar, Watt Glass, Lapovations, Movista and more.
The roots of this unique business plan competition can be found in the origins of the Arkansas Capital Corporation itself, according to former ACC CEO Sam Walls Jr. The ACC was formed in 1957 by a group of Arkansas business leaders as a way of driving new growth in the state’s economy. In like manner, the Governor’s Cup is a way of encouraging new businesses in the state and marketing Arkansas as a destination for entrepreneurs.
“Arkansas was looking for a way to get away from its agrarian dominated economy — not get away from agriculture — but to balance it with something else because agriculture was not going to provide enough employment opportunities for our people. So, so we were to be a source of financing for the industrialization effort and the creation and support of existing companies within the state,” he said.
When Walls Jr. came to ACC in 1989, the organization was not focusing on in-state business development — something that he planned to change. In addition, he observed that it was difficult for beginning businesses to get startup funding — venture capital – in the state. To provide a source of venture capital, ACC established Diamond State Ventures in 1999, an $11 million fund. Walls Jr. said it was formed to create more activity in Arkansas’ business community, and the same principle applied for the idea of the Governor’s Cup.
“The point was to stir the thought process. It’s all based on the fundamental principle that is timeless activity begets activity. So that’s why we did that. Well, the same principles applied when it came to the question about how do we stimulate the creation of homegrown businesses. And so it popped up the idea about having a business plan competition and then through conversations amongst ourselves and whatever that evolved into the model that you’re looking at today,” he said. “We wanted to stimulate the development of a system to support entrepreneurial endeavors and in general support the idea of homegrown businesses here in the state.”
The Arkansas Small Business Technology Development Center (ASBTDC), an ACC partner, held the first iteration of a business plan competition in 1999. The competition was, by all accounts, a success, and ACC asked to come in and administer the event in order to make it an annual event with a major cash pool. The ASBTDC agreed, and in 2001, the “Governor’s Award for Entrepreneurial Development” was held with a $63,000 cash prize pool funded by the ACC itself.
In the early days of the Governor’s Cup, the ACC worked to build up the participation in the competition, appealing to business programs at Arkansas colleges and universities. ACC president and chief operating officer Sam Walls III said that a major early adopter was University of Arkansas professor Carol Reeves, who has championed entrepreneurship in Arkansas.
The Governor’s Cup was pitched to these colleges as a “capstone,” an event that students could participate in that would encapsulate everything they had learned. “Certainly by the end of your business school experience, you ought to be able to understand what a business plan is and the various components of it,” Walls III said.
Over the course of 20 years, more and more Arkansas colleges began participating in the competition. As Walls III said, recruiting for the Governor’s Cup was not “as heavy a lift anymore” due to the cachet that the competition had developed.
However, the Governor’s Cup needed a sponsor to help defray the costs of the growing competition with its large prize pool. In 2002, the ACC asked the Reynolds Foundation to support the Governor’s Cup, and the foundation agreed on the condition that the ACC set up a business plan competition in Nevada and Oklahoma, the foundation’s other footprint states, as well as make the competition an educational experience.
From this time through 2017, the competition was known as the Donald W. Reynolds Governor’s Cup Collegiate Business Plan Competition. The Reynolds Foundation invested approximately $2.2 million in the Governor’s Cup competition, but the foundation announced that it would be ceasing operations, with 2017 being the final year that it would fund the business plan competition.
This presented a roadblock for the Governor’s Cup, but one that was solved by a long-time sponsor for the program. Delta Plastics had served as the competition’s $10,000 Innovation Division sponsor, but in September 2017, the ACC announced that the Little Rock-based company would be taking over as the title sponsor.
An entrepreneur himself, Delta Plastics founder and former owner Dhu Thompson praised the Governor’s Cup as an outlet for young entrepreneurs and a way to encourage these individuals to pursue new endeavors. “What you’re going to find is entrepreneurship is a culmination. It is not finance, it is not accounting, it is not marketing, and it is not advertising. It is a culmination of every bit that, which is what it means to be an entrepreneur,” Thompson said.
Delta Plastics continued to serve as the title sponsor through 2019, after Thompson sold the company. However, Thompson wasn’t through with the Arkansas Governor’s Cup. He returned for 2020, serving as the title sponsor himself.
“They started from zero, and simply put, they built a phenomenal business,” Thompson said. “This program is the flagship of building investment in Arkansas.”
And it’s only getting stronger. Even coronavirus could not stop the Arkansas Governor’s Cup in 2020. Instead of canceling the competition, the organizers opted to hold a virtual event during the competition’s final round. Fifty students on 18 teams, representing eight Arkansas colleges, pitched their business plans to the panel of judges, as they competed for a slice of the $154,000 cash prize pool.
Where is the Arkansas Governor’s Cup going from here? According to Deacon, the Arkansas Governor’s Cup is always ready to adapt to changes. One of the major ideas that has been proposed is moving to the Lean Canvas model instead of the business plan model. However, the ACC executives still see the business plan model as a cornerstone of what makes the competition so effective and educational for its participants.
“When you’re asking someone else for money, whether it’s an equity play or a debt play, when you’re asking someone else for money, they want to see a business plan,” Deacon said. “So we think the business plan is still a very useful exercise in terms of thinking through all the different aspects that go into a business.
“It’s a wonderful model that was created and has performed very successfully and profoundly impactful for 20 years. But as with anything, you want to look at what you’re doing and determine is it relevant, does it need to change? And so we have every year talked about what might we do differently, and if we do, what do we need to change?”
No matter what the Arkansas Governor’s Cup looks like in the future, it will continue to inspire young entrepreneurs to think innovatively and serve as a torch for the entrepreneur community in the state.
“Frankly, it’s one of the greatest and one of the most successful accomplishments that we’ve had here at ACC in terms of the profound impact that it’s had on the entrepreneurial ecosystem in Arkansas,” Deacon said.