The Flying Start-Up competition, which has the backing of the PRCA, gives entrants three months to put their plan together before pitching to a panel of five judges.
The investors, led by former Band & Brown Group CEO Band and Borkowski.do founder Borkowski, are offering the cash to the team with the best business plan for a new agency.
Band said: "There is a lot of entrepreneurial talent out there that has been imprisoned by the twin constraints of cash and confidence. We are hoping to unlock that potential by making it easier to take the plunge."
The winning team will have to invest the prize money in the new agency in return for a stake of between 49 and 70 per cent of the business, depending on the strength of the business plan.
Band and Borkowski will mentor the start-up, but will not play a direct role in the day-to-day management of the business.
The competition is being supported by the PRCA, Gorkana Group and recruitment company The Foundry. The judging panel will include Band, Borkowski, The Foundry MD Lynn Beaumont, PRCA director-general Francis Ingham and Gorkana Group CEO Jeremy Thompson.
Written entries have to be submitted before 1 June, with the final face-to-face pitches taking place in July.