Let me start this out by saying that I am a fan of business plan competitions: I've co-founded and chaired one (Ignite Clean Energy), helped it merge with another (Cleantech Open), been a judge in a few (MIT Clean Energy Prize, ICE, CTO) and a competitor in one (MassChallenge). After a couple years hiatus (a long story), I am now back to recruiting actively for the Cleantech Open Northeast and unofficially for MassChallenge.
We started the ICE Competition (brainchild of my friend and mentor, Jim Walker) in 2004 because we wanted to get people excited about starting clean energy companies (hence "ignite clean energy"). That's why most competitions start: everyone loves a competition, so they're a great way to bring attention to a skill set (innovation and entrepreneurship), a market sector (clean energy, life sciences), a university or other organization, or even the individuals who start them. And of course the winners tend to receive a lot of press and other attention, often from investors.