Startup Companies turning ideas into viable products
Edwin Moore, PhD (firstname.lastname@example.org), BioPhia Consulting, Inc., September 10, 2018
I have been mentoring startup companies in the life sciences for the last couple years. Great ideas are coming from university research labs that may become future products. The faculty, postdoctoral fellows and graduate students are taking on these opportunities, but most have not had experience commercializing a product. They have many questions and unknowns to work through. Incubators affiliated with the universities can be a phenomenal resource to educate, provide valuable resources, and offer lab and office space. I-CORPS (https://www.nsf.gov/news/special_reports/i-corps/) is a national program offered by the National Science Foundation that provide training on customer discovery and developing the fundamentals of a business plan. SBIR and STTR funding (https://www.sbir.gov/about/) from government agencies provides non-dilutive funding to transition applied research to commercialization through the valley of death between initial seed funding and infusion of venture capital. Finding these resources and gaining access is catalytic to budding entrepreneurs, but not always obvious even to those that have ready access.
First-time entrepreneurs in life sciences have many questions about setting up a business, navigating regulatory requirements, understanding legal aspects, and finding funding. Literature from experienced entrepreneurs and mentors, e.g. Leah Cannon How to Start a Life Science Company (https://leahcanscience.com/2017/10/27/how-to-start-a-life-science-company/), can answer many of the generic questions.
Connecting with an incubator can answer specific questions if the incubator has mentors and staff experienced in life science products. Incubators vary broadly in the quality and quantity of resources they provide. Incubators provide space, advice, and leads on funding. Advice may be in the form of mentors with expertise in the areas that entrepreneurs need help, as well as staff with knowledge of commercialization. Incubators can provide lab space and equipment needed for research and development along with offices. Some incubators are part of the university, while others affiliated with the university, and some are for-profit that take a position in the companies. One of the first steps for budding entrepreneurs should be to explore the incubators available and the enabling resources that they provide. In Illinois, EnterpriseWorks (http://researchpark.illinois.edu/enterpriseworks) is an excellent example of an incubator that is part of University of Illinois providing resources, space, and mentors for budding startup companies. The Illinois Innovation Network (https://www.illinoisinnovation.com/find-services-resources) provides access to other incubators in the ecosystem for startup companies.
I-CORPS is a phenomenal program started by the NSF to teach university startup companies about customer discovery and business knowledge needed to become successful. Startup ventures accepted into I-CORPS are provided with seven weeks of an intensive program where teams are expected to participate in training sessions and conduct 100+ customer and customer-related interviews. A cohort of chosen teams meet at the beginning of a program for 3 days at the kick-off session, at weekly webinars during the program, and at a two-day wrap-up to receive training and critique from a teaching staff of experienced entrepreneurs. Startup teams also hear about the trials and tribulations of other teams. The NSF provides a grant to the teams to cover expenses for customer discovery. Besides the direct benefit to the startup team, the team PIs learn the practical aspects of product commercialization, identify customer needs, and will hopefully apply those learnings to future grants and research in their academic labs.
Participation in I-CORPS dramatically improves the probability of funding through SBIR and STTR grants. Congress created SBIR and STTR grants believing that small company startups were a valuable source of jobs for US citizens. Agencies of the government are required to set funds aside for these grants to help transition academic research to commercial application. Funds from SBIR grants in phase I are expected to provide for development of the concept and then commercialize the concept in phase II. These funds are expected to be supplemented with venture funding as the development progresses.
There are numerous competitions that startup companies can participate, some dedicated to students and others open to any startup company. At University of Illinois, COZAD competition (https://tec.illinois.edu/programs/cozad) is available to students. iBIO, Illinois Biotech Innovation Organization, has PROPEL (http://ibioinstitute.com/category/propel/) that supports startup companies, holding business plan competitions that result in funding awards. Competitions not only offer opportunities for funding awards, but they are a stage for entrepreneurs to present their companies, to sharpen their skills explaining their product concepts, and develop elevator speeches and pitches that will be useful when meeting with venture capital groups and shareholders.
Many companies that reach this stage recognize the need for a CEO who has connections with industry and venture capital. Big companies, especially big pharma, have de-risked their internal profiles in favor of finding nuggets among the small and startup companies. Many big companies have started venture funds to fuel development of products in areas of interest. The CEO for a startup needs to have an understanding of the industry and how to structure venture funding to advance a product concept. Individuals with knowledge and character to lead the startup company efforts and navigate the paths of uncertainty are crucial to a company success story.
If youre a budding entrepreneur, congratulations! Still dont know what to do next? Start digging into available resources and examples, like I-CORP: https://hbr.org/2017/03/this-program-uses-lean-startup-techniques-to-turn-scientists-into-entrepreneurs. There is no path to follow you have to be resourceful and figure out what is right for your concept. If you are a faculty with great technology and a great story to tell that could become a product, thanks for your ingenuity and persistence. Now if you want to find application for that great research, find an entrepreneur willing to give heart and soul to make it happen, support as much as you can, and then stay diligent. If you are an industry expert, your mentorship is gravely needed to bring this great new research and product concept to fruition. Industry mentors are woefully lacking. I found after retirement from my career in R&D product development that mentoring startups is extremely rewarding and a fantastic way to pay forward all those lessons I was privileged to learn.