Ask Dr. Clemmons is a monthly advice column for scientists and engineers who are seeking top-notch academic, career, and personal development advice. Please read the introductory article and my most recent article to see what the column is all about, and then send me a question of your own!
In last month's column Scientific Entrepreneurship is an Option, I promised "Want to Start a Company, But I Don't Know How" that I would follow up with specifics on the different resources available to help scientists start their own biotech business based on work resulting from their Ph.D. thesis. Don't Know indicated that science has provided a good foundation, but she was feeling the need to branch out. I think that's a very good idea. You have a lot of hard work ahead of you, but it should be a very exciting and rewarding time. Just remember that regardless of what happens, it's the experience that counts. Resilience is one key to success for any entrepreneur.
There are many ways to proceed once you have your ideas ironed out. After you submit a patent application you'll need some working capital. Once you have a business plan you can use it to solicit "seed" venture capital (VC) from VC firms or individual ("angel") investors. Expansion can be financed via subsequent rounds of financing by VC firms or angel investors. It's a long, hard road, but eventually you may reach the point of taking your company pubic via an initial public offering (IPO), though many companies never "go public", preferring the greater control of a well-financed private company to the considerable capital that an IPO can offer.
Another option is to develop your product just to the point where larger companies become interested, then sell it and start over again. There are pros and cons to each avenue, so please be sure to pick the option that carries the best outcome for you considering your specific situation and level of risk-tolerance.
Starting and Nurturing Your Own Private Company
The most attractive option for science entrepreneurs is to find one or more private investors who will allow you to develop your scientific idea while retaining day-to-day control over your company. These investors may be independently wealthy, or they may be institutional. The key is to convince them that you are the best person to take the idea forth; all you need is a bit of cash.
Sometimes, though, keeping control isn't such a good thing. Managing a startup business and making it a success requires a very specific skill set. Having a partner who knows how to manage a startup business can be a great advantage. For one thing, if you don't have business experience investors will need a lot of convincing before they'll give you money on your own. If you are one of those special individuals with a knack for raising money and nurturing a startup business, there's no doubt that you can succeed on your own. Find an experienced partner and fundraising will be a lot easier. Working as a team will most likely bring better results for you.
New Product Anyone?
One way to get your product to the market faster is by selling it to a larger company that already has the required resources and infrastructure. The interaction may occur through an outright sale of the company, acquisition of one of your products, or through a license to use, manufacture, or sell your product, exclusively or non-exclusively. You may develop your product to the point that you will extract a reasonable price for an exclusive license to your technology, or just sell it to the highest bidder.
The Venture-Backed Route
Because of the large amounts of capital needed to get a biotech product to market, some entrepreneurs feel this route is the best way to get a biotech company off the ground. The caveat is that it may be very difficult to get a venture capital fund interested in you if you don't have any preclinical data, or even worse, just an "idea." Without any real proof of concept, your yet-to-be formed company is dead in the water. If this is the case, forget about VCs for the time being and use the rest of your Ph.D. tenure to propel your idea to the animal-testing stage. The road to venture capital is paved with pitfalls so please take the time to check out some of the resources I have named below to make the road a little smoother.
Resources for Scientific Entrepreneurs
Many excellent resources are available to help you get started with your new venture, regardless of which route you choose. One of my favorite publications is Bioentrepreneur, published by the Nature Publishing Group. A recent article by Shreefal Mehta describes paths to entrepreneurship in the life sciences. I like this article because it describes general considerations of both the market and the characteristics of "Technopreneurs." You will find a number of useful articles in this magazine and since it is in journal format, it is a friendly read to those of us with laboratory backgrounds.
The Evelexa Bioresources Web site bills itself as the "gateway to information, people, and capital for biotechnology start-ups" and is one of the best one-stop resources for biotech Ph.D.s interested in entrepreneurship. It offers a networking community and other resources to help you get acclimated to the business of science. Membership is free.
Another great resource is The Entrepreneur's Guide to a Biotech Startup, Fourth edition by Peter Kolchinsky, Ph.D., which may be downloaded from Evelexa. This comprehensive guide is a roadmap to the biotech venture creation process.
Another helpful resource is your university's technology transfer office. You should check with them to see if they can help with your patent application and referrals to potential business partners. Keep in mind that if you worked at the university on your project, they will most likely be entitled to a slice of the pie. Every university has its own rules for how ownership of businesses are to be shared amongst scientists, the institution, and so on, so make sure to find out what these policies are.
Some universities offer programs that provide entrepreneurial development services. For example, the CONNECT program at the University of California, San Diego, meets the needs of San Diego entrepreneurs at all stages of their business growth. It offers everything from courses for budding entrepreneurs to one-on-one help for people in your position.
Each year the Life Sciences Financial Forum assists technology start-ups with funding. This is definitely the kind of activity you should attend for both networking and funding purposes. If your company is selected to give a presentation at the forum, you may showcase your start-up to VCs ready to invest in new ventures. Nevertheless, just being present at the forum will yield valuable contacts for the future. Your city or university may offer something similar.
So what's the next step? I suggest you spend the next year solidifying your business plan and refining your product. Do some power networking so that you meet people who can help you. This is critical. Many great networking venues are available to allow you to meet other like-minded people, but LinkedIn is a very good online resource. Personally, I've had good networking experiences using this Web site. Once you put your profile up and tell people what your interests are, you should find it pretty easy to make some quality connections for your business.
Learning about the many facets of scientific entrepreneurship is a complex yet rewarding experience. At times, you will feel extremely motivated, while at other times you may experience a low that is so bad you don't want to leave the house. Don't worry; it is all normal. All in all, the experience is worth it, provided you have the fortitude to stick with it and a risk-taker's attitude. When it all comes together, you will be glad you started on the ownership path.
-- DR. CLEMMONS