Planning, Precision, and Profit Margins
11/08/10 15:01 Filed in: GenomeWeb Daily Scan
Submitted by S. Pelech - Kinexus on Wed, 08/11/2010 - 15:01.
Academic scientists that are contemplating spinning out companies from their own research programs face a myriad of issues, so it is very prudent to carefully contemplate all of the ramifications. About half of all of the "successful" small biotech companies are run by the entrepreneur scientists that founded them. Also, established independent investigators at universities often have many of the required skill sets that permit them to found companies. These include a solid knowledge base in their research area, credibility with advanced education and training, the ability to raise funding, develop research plans, budget, track expenses, train and manage personnel, produce results which may include new products or techniques, disseminate their results through publication, and speak publicly amongst other things.
That being said, there are so many hurdles to establishing a viable biotech business. These include dealing with the industrial liaison office in the scientist's home academic institution. I highly recommend that professors do not give up their day jobs in the early years of their companies. Financing is a huge obstacle. It is much better to deal with high net worth angels than venture capitalists. Do not prevail too much upon family and friends for seed financing. If things go wrong, life is much less complicated when you don't have to deal with their disappointments as well.
The entrepreneur-scientist should do everything possible to stay in control of their company. It is better to suffer the consequences of your own mistakes than someone else's. While it is extremely important to listen to advice from other experienced successful entrepreneurs, it is my experience that most venture capitalists and industry advisors really do not have the knowledge base to provide the most sound advice. Most investors want to maximize their investment returns as quickly as possible and get out as soon as feasible. Their business objectives are not really aligned with the entrepreneur-scientist who desires to create a sustainable enterprise that is innovative and successful. I have often heard from venture capitalists that it is better to own a small piece of something that is really big, than a large portion of something that is small. I disagree. Most scientists do not join universities as independent investigators so that they can be told what to do. It is not really in their nature.
It takes many years to really build any business, especially if it is to be world class and competitive. It requires tremendous passion, patience, persistent, sacrifice and hard work. The failure rate for biotech companies is extremely high despite the best efforts of many involved in the enterprise. However, there is tremendous satisfaction that comes from bringing products or services to market that benefit the biomedical research community and the health of the general population, and provides gainful training and employment for others. And if you are really lucky, you might even make some money.
Link to the original blog post.
Academic scientists that are contemplating spinning out companies from their own research programs face a myriad of issues, so it is very prudent to carefully contemplate all of the ramifications. About half of all of the "successful" small biotech companies are run by the entrepreneur scientists that founded them. Also, established independent investigators at universities often have many of the required skill sets that permit them to found companies. These include a solid knowledge base in their research area, credibility with advanced education and training, the ability to raise funding, develop research plans, budget, track expenses, train and manage personnel, produce results which may include new products or techniques, disseminate their results through publication, and speak publicly amongst other things.
That being said, there are so many hurdles to establishing a viable biotech business. These include dealing with the industrial liaison office in the scientist's home academic institution. I highly recommend that professors do not give up their day jobs in the early years of their companies. Financing is a huge obstacle. It is much better to deal with high net worth angels than venture capitalists. Do not prevail too much upon family and friends for seed financing. If things go wrong, life is much less complicated when you don't have to deal with their disappointments as well.
The entrepreneur-scientist should do everything possible to stay in control of their company. It is better to suffer the consequences of your own mistakes than someone else's. While it is extremely important to listen to advice from other experienced successful entrepreneurs, it is my experience that most venture capitalists and industry advisors really do not have the knowledge base to provide the most sound advice. Most investors want to maximize their investment returns as quickly as possible and get out as soon as feasible. Their business objectives are not really aligned with the entrepreneur-scientist who desires to create a sustainable enterprise that is innovative and successful. I have often heard from venture capitalists that it is better to own a small piece of something that is really big, than a large portion of something that is small. I disagree. Most scientists do not join universities as independent investigators so that they can be told what to do. It is not really in their nature.
It takes many years to really build any business, especially if it is to be world class and competitive. It requires tremendous passion, patience, persistent, sacrifice and hard work. The failure rate for biotech companies is extremely high despite the best efforts of many involved in the enterprise. However, there is tremendous satisfaction that comes from bringing products or services to market that benefit the biomedical research community and the health of the general population, and provides gainful training and employment for others. And if you are really lucky, you might even make some money.
Link to the original blog post.