VC for a Day-Being a judge at Wharton’s Business Plan Competition offers a peek at tomorrow’s startup ideas.

Judging a business plan competition is a little bit like being John Doerr for a day. At least that’s what I felt like two weeks ago, as I deliberated with six other judges over who should win the $20,000 top prize at Wharton’s annual business plan contest.

By Erick Schonfeld Business 2.0

In part that was because the other judges were all VCs or investment pros who could instantly pinpoint the slightest flaws and had no trouble eviscerating contestants for them.

(Advice to would-be entrepreneurs: Hone your pitches to perfection. VCs are deluged with business plans, and they’re looking for reasons to throw them onto the reject pile.) One of the nice things about playing a VC was getting to examine an astonishing range of business plans — from wind farms and Wi-Fi mesh networks to biotech solutions and pet health insurance.

The contestants were all MBA students or undergrads, and many of their plans showcased truly creative technologies or interesting approaches to real business problems. Some even presented working products in various stages of development. The business plans were a little rough around the edges — as one VC judge put it during the closed-door session, "I wouldn’t seriously invest in any of these, but we have to choose a winner" — however I wouldn’t be surprised if, in one form or another, some of what we saw in the competition finds its way into the marketplace.

Before we get to the winner, let’s talk about the finalists and some of the fatal flaws that did them in. One had a perfectly reasonable product already developed, but it addressed too small a niche: The product was scheduling software for professional and college sports leagues. Another had an interesting scheme to franchise medium-size wind farms to farmers, promising them the opportunity to make more money from power generation than from raising crops. Somebody is going to figure this out one day, but we just couldn’t get our heads around how you persuade fiscally conservative farmers to go $1 million into debt to finance one of these setups.

Then there was the inevitable Wi-Fi business plan, which aimed to take the popular technology one step further by connecting hotspots together in a mesh so that whole cities could be covered with wireless Internet connectivity. I liked this plan for its ambition and because the team that presented it was made up of spunky undergrads, but the economics were a little fuzzy. Worse, its routing scheme would require Wi-Fi surfers to download a piece of proprietary software onto their laptops. If you’re going to ride the Wi-Fi wave, you have to stick to the standard.

Perhaps the coolest technology belonged to the startup that won third place, FerroSolutions. Its "energy harvester" can convert electrical vibrations from ship equipment or industrial air conditioners into low-level electricity to power wireless sensors. But its financial projections struck us as a little far-fetched, and the HVAC (heating, ventilating, and air-conditioning) market it’s going after would be tough for a startup to crack.

Also in the cool category, a number of the contestants focused on targeted drug delivery of one kind or another. All of these products were based on early-stage biotechnology licensed from various universities. One claimed to have a method that would help drug companies develop medicines that could be delivered to specific cells in the body, such as lung cancer cells.

Another wanted to develop an implantable cardiovascular stent coated with a polymer drug that would remodel and strengthen the artery walls to prevent a recurrence of plaque buildup. (Problem: They’d be competing with Boston Scientific, Guidant (GDT), and Johnson & Johnson (JNJ).)

And a third proposed using altered blood platelets as delivery vehicles for drugs to help with both wound healing and clot busting. All had potential, but they were difficult to judge because they simply didn’t present enough scientific data to give us confidence in their claims.

So it really came down to our confidence in the management teams and how well they answered our questions. The most enthusiastic and seemingly knowledgeable team was from the platelet startup, Biogenomix, which ended up taking second prize. One standout on the impressive team was Hari Sundram, an unshaven, engaging young doctor who looked like he had just come from the hospital. That guy had an answer for everything.

In the end, though, we awarded the $20,000 top prize to Paws, the pet health insurance startup. The MBAs behind this plan had no whizbang technology; their strength was that they seemed to truly understand their potential customers. They’d conducted detailed consumer surveys to find out that 15 percent of the 130 million dogs and cats in this country are good prospects for health insurance because their owners either have already been shocked by veterinary bills of more than $1,000 or simply wish to pamper their pets. The team also convinced a leading veterinary hospital to give them access to decades’ worth of pet medical records so that they could develop reliable actuarial tables. The team planned to keep marketing costs low by teaming with a pet food company to put flyers and coupons inside bags of dog and cat food.

Pet health insurance. It’s a huge, untapped market, it’s an easy business to understand, and once we got past the initial kookiness of the idea, it was the one that made the most financial sense. (You need about 50,000 policies to break even; after that, the margins become very tasty.) Not that this plan was perfect: The team still has to find an established insurance company to underwrite the premiums, and it probably needs more data on pet owners to really understand all the factors that contribute to pet sickness (the owners, after all, are the ones who feed and care for the pets). But, hey, we had to pick a winner.