Though Houston is not a hub for biotechnology yet, the enthused entrepreneurs at Enventure are working hard to change that. As part of their efforts to grow a startup community around medical tech in Houston, they have been hosting bench to biotech discussions on how to launch your own company. Last night, they hosted a panel on Venture Deals, Mergers and Acquisitions. If you missed it or need a recap, here are the 5 things I thought were most helpful for the budding businessperson.
1. Commit Fully to the Idea
Before taking any steps to create a new venture, it is important that all the members of the team are on board. Most importantly, the principal inventor(s) must be completely committed to seeing the company through. Investors such as venture capitalists, universities, big pharma and other entities will not work with your startup if the lead inventor and the team are not fully committed. Make sure that the technology you are working on is not just an unfocused science project. The team and the inventor(s) need to know where they want to go and be serious about getting there.
2. Button Up Your IP Early
Once everyone is on board, the next step is to protect your intellectual property. Talk to your institution’s tech transfer office, to an IP lawyer, or to an experienced entrepreneur and figure out how to best protect the ideas your company will be built around. Locking down the IP early makes it much easier to determine whether or not there is interest in your project because you can…
3. Engage with Your Investors at the Beginning
If the IP is completely locked down, you can begin pitching your ideas to potential investors such as venture capital, investment arms of big companies or other institutions that help fund early stage research. Many investors, especially corporate venture capitalists, know what kind of companies and technology they want to invest in. They will let you know if you have a blockbuster idea ripe for funding and eventual acquisition/IPO or if you have something more ho-hum that will generate limited interest and have difficulty finding mid-stage investment. If the investor response is tepid, go back and rethink your idea.
4. De-risk the Idea and Conserve Cash
Once you start the company, a common misconception among new founders is they need a fully operational entity complete with CEO/CFO/sales staff/offices/etc… Avoid the trappings of a brick and mortar business for as long as possible. Stay ‘virtual.’ If the science is still in the lab at your university, stay in the lab as long as possible. Your investors will know when to add the business staff. Instead, focus on conserving cash and de-risking the idea for the next round of investors. Figure out the next step to get through FDA trials. Perform a study and publish a paper on the technology. Figure out the risks of the idea and eliminate them. This more than any CEO/CFO will create confidence in your business for the next round of investors.
5. Leverage Your Board/Institution to Open Doors
Your company’s board of directors is one of your key resources for finding feedback and investment. They should be able to open doors for you that lead to constructive feedback on your business and potentially to investment. Further, within your personal network and within your institution, you should find the individuals who are key influencers that can put you in touch with the decision makers at VC firms or big companies.
If you are in any way interested in starting a business, I highly recommend attending Enventure’s events. While you may not be starting a biotech company, the information provided is applicable to many fields and all kinds of business.