While you are in the process of filing a patent to protect your IP, it is useful to learn how to describe the problem you are solving and your approach without revealing confidential details. Startup founders can ensure that the technology has a viable market and create a validated plan to get there. Be sure to discuss these issues with your attorney. His research was centered on engineering Salmonella to produce and secrete spider silk. A youthful team is great, but an experienced person will help anchor the team and give you credibility in front of investors.
Also, be sure that the technology of interest is protected by intellectual property IP. Next, secure the assets, IP rights and commitments from the inventors and key personnel if you are not one who have the know-how required for making the technology successful. Carefully identify these individuals and understand their interest and commitment to the future organization. Not all individuals with interest at this stage should be founders of the company; nor should all founders be equally compensated with identical amounts of stock unless all intend to work full time in the organization once it is funded.
Determining percentage ownership is a difficult issue. You do not want one founder receiving identical equity ownership who will not be working with the new organization yet keeps a secure position receiving a good paycheck and rides on the coat-tails of other founders. This individual is a key partner. Your attorney will be the individual you go to for advice, guidance, counsel, and of course, legal answers. They will help you navigate through the corporate and business issues during all stages of establishing and growing your company.
Therefore, they need to be someone you trust and someone with whom you work well, and above all, a professional with many years of expertise in advising start-up biotechnology companies. There are many reasons to incorporate early, one reason is that you can then issue founders stock without having to pay exorbitant sums of money for shares or incur large tax consequences since the valuation of the company at this stage is extremely low.
Once you gain traction in your company and begin to have investor interest, biotech companies should be C Corporations rather than LLCs. Investors in biotech and life science companies may wait to invest if they do not want to go through the trouble of changing to an appropriate corporate structure. It is impossible to raise money without a well-written business plan that clearly describes: Write your business plan with the guidance of your attorney.
You will then seek an audience with the appropriate investor groups interested in your stage and sector of industry. Keep your day job!
Build the company carefully while minimizing your risk. As you work on your new enterprise, be careful about performing any work for the new enterprise while employed at your current place of business. Be sure to discuss these issues with your attorney. Be sure to outline the key value-increasing product development milestones throughout the entire product development pathway.
Most VCs and angels have moved farther down the pipeline to where the technology has been de-risked, so government grants are certainly worth your time and effort.
Finally, leave no rock unturned. Research your investors before meeting with them. Find out what their investment interests are and in which space they usually participate.
This will help you spin your story appropriately in terms of specific application if you have several possible ones , amount to ask for some large investors cannot give you seed money , and your use of the funds. Sooner or later, you will run into the rumor that you should not talk science with investors.
Know that this is just a myth; sophisticated life science investors will want to understand the technology into which they are putting their cash. Your investors will know more about the market than you will. This means that you do not need to dwell on the point that cancer is an important problem. Listen to your investors' advice even before they become your investors.
Their insight can help you identify opportunities and refine your strategic thinking. This advice applies to technologies with more than one application, such as platform technologies; in such situations, it might be difficult to pick which application or market to pursue first.
It is useful to think of having a strategy that includes an earlier or easier path to revenue. Large markets may be alluring as a first battlefield, but they are often plagued with regulatory and market risks. Find out whether there is a better route to establish your proof of concept, even if it is in a smaller market.
Having a direct path to market will allow you to move quicker on fewer funds; this will make it easier to tackle the larger and more challenging market later on. Refactored Materials realized that ballistic armor and medical devices would be challenging markets to crack, and they received much interest from the textile industry. The door is open to come back to the other applications in the future, but the silk textile market is primed for disruption.
There are many risks in the way of taking a scientific technology to market: Higher risk in any of these areas correlates directly with the difficulty of getting money since the uncertainty of return on investment for investors is higher.
Convincing investors to accept these risks strongly affects early stage companies, as they have the largest number of unknowns. Your goal as an entrepreneur is to focus on answering the questions that will help you address and decrease those risks. Understand what the major risks are that stand between you and getting to market, and focus your time on them.
As a startup, one of your most important tasks will be to discover your business model, that is, how your company fits into the market. What is your value proposition? Who are your customers and partners? Do you understand how your product fits into the entire process or patient care procedure?
If you are developing a diagnostic for a disease that has no current therapy, why will people be inclined to use and pay for your product? You might have answers to all these questions, but at the moment they are really just hypotheses.
The founders are the best people to do this validation, since they have a deep understanding of the technology and can make changes to the model or pivot if necessary. Money is the lifeline of a startup, and you will never have enough. You must use it wisely when you have it, and take it whenever you can.
Make a budget and prioritize to ensure that your resources are going toward your key activities, and follow this plan with superb execution: For example, you do not need to hire a full-time business person from the beginning; instead find someone who is willing to work with your company as an advisor or interim CEO in exchange for equity and reduced or no pay. If they believe in your company, they will be incentivized to help the company grow. When being lean, you often need to find a middle ground that allows you to focus on your core skills.
Conversely, you do not need to hire a full-time accountant; outsource the company's accounting work, and pay by the hour or service. An idea alone is not enough to make a company; you need execution and feedback from others. While you are in the process of filing a patent to protect your IP, it is useful to learn how to describe the problem you are solving and your approach without revealing confidential details.
Being able to describe your idea in nonconfidential terms will also allow you to avoid having to ask for a nondisclosure agreement NDA when you have an introductory discussion with a potential partner. Staying informed is the key to success: Reach out to faculty who have founded companies, and try to get connected with the entrepreneurs that drove their company.
Despite the plethora of at times daunting things to think about, I have not yet met a single entrepreneur who regrets starting a company. There will be ups and downs, much as in academic science, but as with any goal worth pursuing, it will all be worth it. In the case of Refactored Materials, it will be revolutionizing a centuries-old industry by enabling spider silk production for multiple applications at a large scale and in an environmentally conscious way.
National Center for Biotechnology Information , U. Journal List Mol Biol Cell v. This article is distributed by The American Society for Cell Biology under license from the author s. Two months after publication it is available to the public under an Attribution—Noncommercial—Share Alike 3. Abstract The spirit of life science entrepreneurship is alive and well, with outstanding innovation hubs arising throughout the country and the world.
Open in a separate window. Identify the unmet need that your technology addresses The best way to articulate your solution and the value of your approach is to clearly state the problem you are solving. Build a high-quality, well-rounded team No startup was ever created by a single person. Understand incentives, and use them to drive your company to success Once you have put your all-star team together, make sure the people involved are incentivized to do their best work for the company.
Get quality legal advice A good lawyer will become a key advisor in the early stages of your company, so it is crucial to seek out quality legal advice in the field of your startup a lawyer with experience in real estate can help little when it comes to a company inventing cardiovascular implants. Money, money, money—search under every rock There are many sources of early-stage funding: Respect your investors Research your investors before meeting with them.
Be unfocused at the beginning, but learn to identify opportunities This advice applies to technologies with more than one application, such as platform technologies; in such situations, it might be difficult to pick which application or market to pursue first. Identify your white-hot risk, and use your time wisely There are many risks in the way of taking a scientific technology to market: Test and build your business model—no, you do not need a business person—yes, you can use a scientific approach, too As a startup, one of your most important tasks will be to discover your business model, that is, how your company fits into the market.
Be lean Money is the lifeline of a startup, and you will never have enough. Tell a story without giving away your secrets An idea alone is not enough to make a company; you need execution and feedback from others.