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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...
theLabRat
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