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HOME > Review > How to start your own company
How to start your own company

How to start a company when times are tough...

Obviously, times are tough right now for starting a company. As some of you may know, I co-founded a company around a technology discovered by a friend that is in a University position and I thought I would share some of my experiences with you. (check it out at http://www.juvaris.com).

How to start a company - Ideas and intellectual property

  • Don't worry about having a patent that is issued! The USPTO is now taking two years for new filers to recieve thier first office action, so your patents won't issue for a minimum of three years.
  • File patents early. A common practice is to file a provisional patent (US only) and you have one year to gather some data.
  • Make a deal with your patent counsel. Although most companies these days will not take stock, they may be interested in an option on the technology should you not be funded.
  • Take a job at a University where you may be able to nourish the idea. One option would be to take a University position to try to get funds via SBIR/STTR grants to develop your idea. Many Universities would be very supportive if you talk to the technology transfer office and let them know you have an idea that you think is worth starting a company around, just make sure you understand the conflict of interest policy of the University first.

How to start a company - Make a business case

  • If you are the founding scientist DO NOT represent yourself as a CEO. This is the classic mistake when someone trained in the sciences thinks they can start a company, get it funded and make it successful. If you want to use the title, use Interim CEO. The cruel fact is that getting a company started on the right foot requires legal, financial, mangement, and business knowledge (these are rarely part of a Ph.D. program). Science knowledge is good in a CEO, since he can talk with knowledge about your ideas, but it is secondary.
  • To make a company viable, your idea must be able to generate revenue. The days of the sexy technology or even the innovative biological tool ideas being funded are gone. You need to plan out at least three years forward and predict revenue before regulatory approval (even more important if the company is based on therapeutics).
  • Look for consultants to fill out your management team. Offer equity and defferal of payments until milestones are reached. A potential CEO candidate should not be intimidated by taking a salary deferment if they believe they can raise the money...
  • Check out the local small business administration or other non-profit organizations that offer business assistance.
  • Many Universities offer business assistance groups as well.
  • Another option is that some MBA programs encourage their students to work for a startup and use them as a business case for class.

How to start a company - Raising money in alternative ways

  • Think of individual that may be wiling to put in a small amount of money to get the business going.
  • Grants - If you are lucky enough to be at a University that would allow this - write some SBIRs or STTRs to get some startup money. The time frame for getting these is pretty long (6 months from submission to getting the money in hand).
  • Recruit interested people at non-profits to write SBIRs or STTRs for the company - many people will be interested, especially when you tell them the funding level for phase I submissions is significantly higher than R01!
  • License out aspects of the technology that are not important to the overall mission of the company.

How to start a company - Outsource as many of the secondary functions as possible

  • Administaff or other agency - have them take care of your benifits, payroll, etc when you get enough money. This helps you concentrate on building your business not managing it.
  • Jobscience - I have used them many times in my companies to find qualified applicants for open positions. They have a good database of resumes and other features for managing HR as your business grows.
  • Incubator laboratory facilites- The company I co-founded was based at MMRI (Molecular Medicine Research Institute). MMRI provides the tools and infrastructure that allows researchers the capability for immediate experimentation with minimal start-up and overhead expense. MMRI can share state-of-art research equipment and capabilities with potential affiliates at minimal cost to them. To give you an idea of time savings, I paid my fees and was conducting experiments within 48 hours! Try that if you are setting up your own laboratory facilities!

How to start a company - Obviously there is a lot more to it than this... A couple of good books help

  • High Tech Start Up - The complete how-to handbook for creating successful new high tech companies.
  • Zero-to-IPO - Real insight on what it is like to start a high tech company in Silicon Valley.

The most important this is tenacity and keeping going as long as you believe in it...


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