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Understanding Access to Capital Issues for Entrepreneurs through Simulations

Understanding Access to Capital Issues for Entrepreneurs through Simulations

EC007
Trevor Lane, Jordan Tampien
Access to capital is a major barrier for entrepreneurs. Most businesses are not aware of the various options to find affordable capital. So the interactive, educational simulation called Pitchfest was developed as an innovative approach to teaching the very complex topic of entrepreneurism and access to capital. This publication discusses the foundational elements of Pitchfest, how it works in action, and culminates in the rules, structure, and outcomes of playing Pitchfest with any age group from children to adult educators.
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Introduction

Pitchfest is an interactive game to teach entrepreneurial thought and access to capital using real props and fake money. The goal is to reinvent an existing product, teach creative, entrepreneurial, “out of the box” thinking, instill basic business planning steps, develop an “elevator pitch,” and introduce the concept of bookkeeping or accounting on the road to winning. The winner of Pitchfest is ultimately the group that develops, pitches, and raises the most capital for their product.

The original design of Pitchfest was to teach players how to “think outside the box” when approaching access to capital issues that limit their ability to grow their business. Coaching the participants to understand the importance of unlimited creativity with re-inventing a product is also at the core of developing the habits of how an entrepreneur’s mind works (Chick 2012). The expert lens of Cook (2011) demonstrates there is an ongoing exploration of the entrepreneur’s mindset and creativity that is essential to strategy and ultimate success.

Short Simulation to Teach Entrepreneurship & Small Business Game

While simulations have limitations on their connectedness to reality, short simulations and the excitement of games aid in building intellectual competence that can be fostered and grown with the notion there are higher goals at work, especially when teaching entrepreneurial skills. One goal with short simulations is to build mental models and to solidify abstract concepts into a framework that will allow a learner to continue and broaden their learning horizons. Interactive learning and short simulations are ways to enhance knowledge and determine learning levels, while especially bringing invisible forces to the forefront of learning and exposing them to the learner (Psotka 2013). According to Robert Horn, pioneer of simulations and games, in a standard reference book for the field of learning games, it is paramount that learning games have a solid design, consider player data (such as age appropriateness, number of players or groupings), devise rules, and has clear objectives and established roles (Horn and Zuckerman 1977).

As more and more digital natives are coming of age, the reality of the effectiveness of and the important need for powering up creativity with short simulations is hinged on the premise of a game because of the impact it has on these learners (McGonigal 2011). Hence, a strategically well-crafted entrepreneurial game, rooted in business education fundamentals and executed in a controlled or timed environment, allows educators to quickly instill complex processes in the minds of learners. For instance, according to McGonigal:

Marc Prensky, author of Teaching Digital Natives, describes the current educational crisis like this: “‘Engage me or enrage me,’ today’s students demand. And believe me, they’re enraged. All the students we teach have something in their lives that’s really engaging – something that they do and that they are good at, something that has an engaging, creative component to it … Video games are the epitome of this kind of total creative engagement. By comparison, school is so boring that kids, used to this other life, can’t stand it. And unlike previous generations of students, who grew up without games, they know what real engagement feels like. They know exactly what they’re missing.”

To try to close this gap, educators have spent the past decade bringing more and more games into our schools. Educational games are a huge and growing industry and they are being developed to help teach pretty much any topic or skill you could imagine, from history to math to science to foreign languages. When these games work – when they marry good game design with strong educational content – they provide a welcome relief to students who otherwise feel under-engaged in their daily school lives.

Pitchfest took the simulation model with clearly defined roles and rules to teach a variety of entrepreneurial skills that apply to participants of almost any age group.

Goal: Think like an Entrepreneur

Thinking like an entrepreneur is the foundation of Pitchfest and requires participants to understand the importance of “framing” one’s mindset to essentially deconstruct academia in order to embrace the creativeness of the entrepreneurial spirit, which is very important. Players must youthfully

“think outside of the box” because academia has a tendency to erode this youthful thinking over time while placing boundaries on “how we play the game” – so to speak – and removing these boundaries are essential to optimizing the game and experience (Dieckmann 2009). Fundamental to the game, as well, is using action methods in the re-invention of products as the players role play the “elevator pitch” because research has shown this is highly effective in culturing a learner’s mind toward teaching communication skills, which are necessary to winning the game with a catchy “elevator” or sales pitch (Baile et al. 2015). Therefore, creative thinking juxtaposed with a strong business plan with limitless uses for the products and action methods with developing the “elevator pitch” will set the stage for a competitive, fun-filled environment.

To illustrate the effectiveness of creative thinking when it comes to reinventing a product, here is a study about a paperclip. In the late 1960s, George Land conducted an experiment to test the divergent thinking abilities of the same 1,600 school children between the ages of 3 and 5, 8 and 10, and finally 13 and 15. The experiment simply gave the kids a paperclip and asked them to come up with as many uses for it as they could (Land and Jarman 1998). Between the ages of 3–5, 98% of the group ranked as “divergent thinking geniuses.” By age 10 only 30% of the same group of students qualified to such a level (Land and Jarman 1998). By age 15, only 10% of the kids were thinking at a “genius” level of divergence. Then the same test was given to 200,000 adults where only 2% tested at the genius level (Land and Jarman 1998). The lesson appears clear that creativity and thinking outside the box may be a learned behavior. It is evident that the way we educate kids seems to be great at encouraging linear thinking – memorization, multiple choice selection, repetition – but fails to teach or encourage creativity in the exercises.

What is Pitchfest?

The basis of Pitchfest is to develop a product to sell. To start the game, participants are provided random objects that they must use to create a product. For many participants, re-inventing a well-known product can prove difficult, and trainings to date have shown younger age groups (12–14 years old) have had more success with this facet of the training. The reality is that facilitating the mixology of information and elements of product re-invention and business startups are important pieces to winning the game and celebrating business success in the real world (Gruber 2014). Groups are then given 30–45 minutes to develop the product complete with a name, what it does, competitive advantage, and sales price.

This timed or controlled environment is key to successfully building a competitive atmosphere for learners to experience a walk down the entrepreneurial path. Hence, encouraging participants to lift the mental boundaries and truly get creative is arguably the most fun part of the simulation for everyone, including the instructor (no such thing as a bad idea in this phase of the simulation). Facilitating creativity sometimes requires asking open-ended questions without providing input. Lastly, to introduce the concept of peer-to-peer lending, each participant becomes an investor and must choose which of the products to invest in. The company that raises the most funds at the end is the winner!

Rules for Pitchfest

  • Initial presentation of re-inventing products and the importance of capital for businesses to start and grow. We want to put participants in the shoes of entrepreneurs and introduce the creativity required to be one.
  • Break into groups of 4–6 people, with no more than a total of 40–60 players for most effective game play.
  • Create a business/product around an already existing item that is provided and selected by each team.
  • Business planning:
    • 10–15 minutes – Business Concept, Planning, and Target Customer
    • 10–15 minutes – Identify Market Category and Identify One Key Product Benefit
    • 10–15 minutes – Identify Competition and Articulate One Unique Differentiator
  • Develop a 60–90 second pitch for funding the product and business.
  • Each team selects a sales person to present and an accountant that will collect and count the capital raised.
  • Each team’s sales person has to deliver “the pitch” in less than 90 seconds.
  • All participants are given $100 of prop money and, once presentations are complete, they must give the prop money to the accountant of each product for accountability and reporting purposes.
  • Players and teams cannot bootstrap (fund their own product) and invest in their own products.
  • The business that receives the most funding wins!

The competitive environment of planning and developing the product adds to the learning experience in this short simulation. Pitchfest is best played when there is a minimum of 30 minutes for the game itself with smaller groups and up to an hour with larger groups. Ideally, a 90-minute session to include the presentation and instruction with an average group size of approximately 40–60 participants in the short simulation of Pitchfest.

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