By Sylvia Norman, Sandhill Crane Diagnostics
An attendee at a recent networking event asked the startup panel whether it was possible to bootstrap a Life Sciences company. I thought “you bet it is and you’re in one of the best cities to do it.” And that’s how the idea to generate an SDEE listing of startup resources was born. Many of our SDEE members founded their companies using the wealth of entrepreneur resources available here in San Diego. We’ve drawn on their experiences to generate our initial lists. The following is a summary of what we've identified so far.
Lab Space - Startups need proof-of-concept data to obtain funding via investors, grants or partners, so finding wet lab space is an early priority. Luckily, San Diego has a variety of affordable wet lab incubator spaces to choose from including JLABS, Bio Tech & Beyond, Home Labs (Lab Fellows), BioLabs San Diego, Biotech Incubator of San Diego, La Jolla Cove Research Center and San Diego Science Center (Pacific Beach). Advantages to being part of an incubator are savings on capital equipment, shipping/receiving, facilities management and interacting directly with other Life Science entrepreneurs. Not looking to join an incubator? Less formal shared lab space options are available through companies with extra space available. SDEE posts these opportunities on our social media sites as we learn about them.
Accelerators - Need help with planning or growing your business? Check out local accelerators like Hera LABS, CONNECT Springboard and San Diego SCORE which offer business development mentoring at low or no cost to entrepreneurs. Join our SDEE events and workshops for expert advice on topics to help grow your company.
Equipment & Supplies - Equipment and supplies can take a big chunk out of your budget. Even if working in an incubator with shared equipment, you will likely need additional research equipment and lab supplies. ALT (American Laboratory Trading), Lab Trader and BioSurplus are local vendors who sell used or refurbished equipment at discounted prices. Sustainable Surplus and BioPioneer are great resources for lab supplies. For group discounts on lab purchases and business services, check out California Life Sciences Association (CLSA). Looking for free equipment and supplies? Follow our SDEE social media and eblasts for announcements.
Discounted Services – Need custom lab support? Lab Fellows and Managed Lab Services can help fill those requirements. Our SDEE business directory and consultants directory have an array of resources for low cost custom services tailored to startup needs. Don't forget about local Life Science core facilities when looking for affordable specialty lab services.
That’s the start of our findings. We’ll be updating our lists as we learn about additional San Diego resources. Do you have a favorite? We’d love to hear about it. Contact Sylvia Norman at firstname.lastname@example.org with your tips.
Wishing you a happy and successful 2017! Thank you to our members, sponsors and volunteers for helping us provide educational & networking entrepreneur events to the San Diego community. Check out the highlights from 2016 in our newsletter http://www.sdentrepreneurs.org/newsletters. Have an idea for an event or workshop you would like next year? We'd love to hear about it. Just contact Danielle Hayes at email@example.com.
International Federation for Adipose Therapeutics and Science 2016 Conference Highlights
by Neil Thompson
Fat to the face: My time at IFATS 2016
Why would you want to put fat in your face?
That’s the question I asked myself before attending the International Federation for Adipose Therapeutics and Science (IFATS) 2016 annual meeting. I don’t know too much about fat except that most of us would rather have less of it. Held from November 17-20, clinicians, researchers, and industry folk all gathered in San Diego at the Westin San Diego Gaslamp Quarter. I was among them, and I was excited to be there.
For decades, most cosmetic surgeries were carried out with non-biological fillers. Plump up your face? Eliminate dimples on your thigh? Fillers fit the bill. The problem with them? They don’t stick around. Up to 60% of volume is lost with these types of fillers. Fat became the solution. In fat, more and more study has focused on using fat from liposuction to address filling those problem areas. The fatty material removed from the body during liposuction, called lipoaspirate, was historically seen as waste and thrown away. No more. Surgeons are now separating the fat tissue from lipoaspirate through various means, like centrifugation and simple decanting, to access the stem cells residing in the tissue. Stem cells have the ability to transform, given the correct cues, into fat cells. The stem cells can then be reinjected into problem areas so that the stem cells attract cytokines that turn the stem cells into fat cells.
Many companies, some of which were exhibitors at the meeting, are working on methods to better separate the fat tissue from lipoaspirate while increasing the yield and viability of the isolated stem cells. Results are promising. Companies like Tissue Genesis and LifeCell are developing these fat-isolating technologies. LifeCell in particular has launched a product, the REVOLVE™ System, which looks like a salad spinner. It operates by gently spinning around lipoaspirate to separate the fat tissue from blood cells, debris, and extraneous fluid. The entire process takes about 90 minutes and produces more viable stem cells than decanting alone. Another company, Andrews Technologies, showcased HydraSolve®, which uses a specially made cannula to liquefy fat with warm pressurized saline. Fat sucked into the cannula comes in contact with warm saline circulating within the cannula, which liquefies the fat. The cell viability within the aspirated fat is higher than in other traditional fat harvesting techniques.
Want to avoid liposuction and only want to fix a tiny problem area? MTF has a product, Renuva™, which can do just that. Made of allograft fat tissue (i.e. other people’s fat), Renuva is an injectable off the shelf product, eliminating the need for fat harvesting by liposuction. A competitor product, Allofill™ by Biologica Technologies, also exhibited at the meeting.
In addition to companies showing their wares, researchers also presented their work. Ever heard of microneedling? Me neither. The microneedler looks like a small rolling pin with tiny needles protruding from it. Researchers from Turkey’s Koc University School of Medicine found that rolling the microneedler over the problem area prior to fat injection increased vascularity and led to quicker engraftment of the injected fat. Oxysterol was a new term for me, too. A derivative of cholesterol, researchers at UCLA showed a link between oxysterol treatment and decrease in weight. They are looking into developing oxysterol treatments to prevent obesity. Research out of the University of Louisville is experimenting with developing cell-encapsulating spheroids. The team is 3D printing hydrophilic dots onto hydrophobic surfaces to create the spheroids. A 3D morphology of the cell-binding surface has been shown to be quite influential in maintaining the in vivo characteristics of cells. Cells plated on a flat surface typically don’t behave like cells found in the body.
The major takeaway from the meeting is that there’s no gold standard for isolating fat from lipoaspirate. Some swear by liposuction followed by allowing the fat layer to separate from the blood cell-laden liquid. Others advocate for gently spinning or centrifuging the lipoaspirate. In the next few years, I suspect more study will reveal the optimal method to get at the fat tissue’s stem cells and that method will be widely adopted. Barring prohibitive costs, of course.
So why would you want to put fat in your face? Because it works! Besides, we put Botox in our faces. Why not add some fat to the mix?
SDEE was recently treated to a tour of the new BioLabs San Diego coworking and wet lab facility for life science startups. San Diego is the newest location for BioLabs which also has facilities in Cambridge, San Francisco and North Carolina. As we toured, Susie Harborth, co-Founder and Managing Director, explained this is a 3 building complex (called GENESIS at Campus Point) featuring coworking space, a 16,000 sq ft wet lab stocked with shared equipment, conference rooms, offices and event spaces. She told us the San Diego site has a capacity to house 15-20 companies. We started in the main building which has a spacious open seating coworking area surrounded by conference rooms, private offices and the wet lab. The area is interspersed with informal spaces where co-workers can network. The star attraction is the wet lab with plenty of bench space, new equipment and an adjoining tissue culture room to be shared by BioLabs’ members. Susie mentioned that for those members needing vivarium services, Explora BioLabs is located right next door.
Susie explained that BioLabs is a membership-based, ready-to-move-in facility where startup life science companies can develop and grow. So how does the BioLabs membership work? Life Science companies can apply for a 2-year agreement with an “a la carte” use plan that includes an array of options to fit specific needs. Members can reapply after 2 years or opt out when ready to grow. Memberships start at $2000/month per bench plus a $400 per-person membership fee. As an added perk, BioCom offers a complementary membership to all BioLabs companies. BioCom is a founding partner of San Diego BioLabs. Additional amenities include an on-site lab manager, administrative assistance, Environmental Health & Safety support, centralized purchasing, shipping and more. There is even an on-site gym and swimming pool for when members need a break from their work.
BioLabs is a welcome addition to San Diego life science startup resources, helping local entrepreneurs launch, develop and grow their companies. Want to check out BioLabs for yourself? Contact Abegale Colmenar (Director of Operations) at firstname.lastname@example.org to schedule a tour.
By Amy Duncan, Goldfish Consulting Inc.
It’s not about introducing entrepreneurs to investors, but preparing for the pitch. That’s what Steve Hoey said when I asked him about the Springboard program at CONNECT. Mr. Hoey is Senior Director of Springboard and Innovation Research with CONNECT. CONNECT has been involved with the San Diego technology and life sciences communities for over 30 years connecting entrepreneurs and C-suite executives to people, capital, and resources they need for success.
Their flagship program, Springboard, is CONNECT’s startup acceleration program designed to assist entrepreneurs with strategic guidance from experienced mentors. It is a mentoring program that pairs early-stage life science and tech companies with mentors to help them crystallize their business model and the commercialization strategy to prepare for investment.
“Our sweet spot is companies who have moved beyond the ‘ideation’ stage,” said Mr. Hoey. “It’s not a program for individuals who have a business idea, but don’t yet have the plan, technology, or prototype in place.” Those are too early for Springboard. Most companies in Springboard have a prototype, are moving toward commercialization, and are looking to define the commercialization strategy in order to seek funding to support scaling their business.
Mr. Hoey addressed where the funding comes in. “Springboard is not an access to capital program,” said Mr. Hoey. “There’s no funding. It’s not an introduction to investors program.” Instead Springboard helps the entrepreneur develop their business model and determine their value proposition for potential customers, licensees, investors, or acquirers. “We help them think that through,” he added.
In contrast to what Springboard is not, applying companies should be at the prototype stage or moving toward minimal viable product. If it’s a therapeutics company, it should have its core scientific team in place. “One of the challenges life science companies face, particularly when the founders are scientists, is bringing someone on the team with commercial experience to effectively think about commercialization,” said Mr. Hoey. “Companies applying to Springboard should have given some thought to expanding their team beyond the scientific founders, to include commercialization experience.” They should understand their target market and ideal customer. “They should have a grasp on the pain they are solving with their solution, how it’s differentiated, and a preliminary look at the competitive landscape,” said Mr. Hoey. These areas are all refined in the Springboard program, but if entrepreneurs haven’t given them any preliminary thought before they come to the intake meeting, they won’t clear that hurdle. Companies need to be far enough along to benefit from the mentoring the program provides.
Mr. Hoey explained the “traction gap” as another hurdle for entrepreneurs ultimately seeking funding. To explain the traction gap, he compared a fresh graduate at the top of their economics program, but never had a job to someone with one year of business experience. “You are less hirable than someone who has one year of business experience,” he said. While Springboard helps entrepreneurs define their commercialization strategy, if they are able to execute on that strategy while they are in Springboard, they may well be investible at the end of the program. “Executing on the commercialization strategy, in investor eyes, is the key element that defines if a company is investible, which is whether they have traction,” said Mr. Hoey. “It is not automatic that you’re investible when you complete Springboard, or any accelerator for that matter.”
It’s essential to execute on the business model. Springboard helps entrepreneurs think through all the elements of the business model including how to go to market and how to develop the company further. “Springboard companies are working through their investor pitch deck through all this,” said Mr. Hoey. “The investor pitch deck should be strong, but in the end you also have to show that you’ve executed on that model that you’ve outlined.” Some companies are investor-ready at the end of Springboard, while others need to grow their business or execute on that business model. Companies typically receive funding anywhere from 3 to 18 months after they complete the program.
While Springboard does not introduce entrepreneurs to investors, CONNECT has a new, highly competitive program, called CapitalMatch that addresses this stage. The program accepts applications multiple times throughout the year. There is a life sciences track and a technology track. Any company in San Diego can apply. “A select number of applicants will be invited to pitch to a small panel of investors who will determine whether they are investor-ready,” said Mr. Hoey. “Introductions to investors are made for the investor-ready companies.” A number of Springboard companies apply to CapitalMatch separately. “We’ve separated the access to capital from the mentoring program,” said Mr. Hoey. “We want the companies to be focusing on developing the right value proposition, team, and model to commercialize the technology.”
CONNECT Springboard has shepherded a number of successful companies including Events.com, ecoATM, Freedom Meditech, and Benchmark Revenue Management, which merged with Avadyne Health. Since 2005, alumni companies have raised almost $1.5 billion and created 5,000 new jobs. In 2015, Springboard alumni companies had their most successful year raising funding to grow their businesses, securing almost $200 million combined.
If you are moving toward commercialization, and need help refining your commercialization strategy for subsequent fundraising, then CONNECT’s Springboard program may be a good fit. Visit the CONNECT website http://www.connect.org/ to learn more about the programs and download the Springboard application.
By Roberta Alexander
On October 13, 2016, SDEE discussion was about beer, instead of drug discovery and biotechnology. The event was held at the Roth Auditorium at The Sanford Institute for Regenerative Medicine and attendees could sample several beers on the patio, looking at the beautiful view of the sunset on the ocean. Although the topic of the discussion seems unfitting with SDEE’s scope, there are several reasons why the event was focused on beer: 1. Craft beer in San Diego is made by entrepreneurs who face challenges similar to those faced by scientists in start-up biotech companies; 2. SDEE holds monthly happy hours at a local brewery, so there is definitely a connection!
Panelists at the event, which was moderated by Randy Schreckhise, were Eric O’Connor from Thorn Street Brewery, Matt Del Vecchio of Duckfoot Brewing Company, and Simon Lacey of New English Brewing, where SDEE members and friends meet for happy hours.
Where did the idea of starting a brewery come from?
Duckfoot Brewing Company was founded about 15 months ago but started, as an idea, years earlier, when Matt and his wife spent many weekends driving from New York City to Vermont to escape the stress of their lives in the city. Matt was a financial advisor not happy with his job and his hectic life in NYC. Although craft brewing was not very popular at the time, beer and snowboarding were passions that he wanted to pursue as career. While in the process of writing a business plan for a brewery catering to the snowboarding community, he was diagnosed with celiac disease, and his life became quite dark. The depression lifted when he discovered a brewery in Oregon that was making a couple of gluten-free beers using an enzyme to break down gluten. Thus, Duckfoot Brewing Company was born with the goal of making lots of different wonderful gluten-free beers, not only for snowboarders, but also for the celiac and gluten-free communities. Matt’s passion for snowboarding was the inspiration for the name of the brewery, as duck is a popular snowboarding stance. Although still very young, Duckfoot Brewing Company has a tasting room and self distributes its beer up to Los Angeles.
Simon Lacey’s story is not too different from Matt’s in the sense that he, too, was tired of his career and wanted to pursue his passion. Simon was a mechanical engineer who moved to San Diego in 1995 to work for Nokia. After a couple of lay-offs, he went to a beer convention in town in 2004 and fell in love with the business of brewing. He learned the ropes via internships and small jobs, and opened New English in 2007. He is British, so that is where the name of his brewery originates. Simon did not write a business plan, but knew he wanted to produce beer by local people, with local products, and for the local community. To keep the costs down during the recession of 2008, he ran the business by himself in the Old Mission Brewery using shared equipment, and in 2011 he finally moved to his current location in Sorrento Valley. Ten years and 3 full time employees later, he is currently working on a business plan. New English Brewery has 1 distributor and plans to expand distribution to Orange and L.A. Counties. Now that grocery stores understand that customers want craft beer, Simon plans to get some coveted shelf space in grocery stores. Canada and Scandinavia are on the horizon, too.
Eric’s story also fuses science with beer. He was the director of the flow cytometry core facility at the Sanford Institute for Regenerative Medicine until recently. Before that, he headed a flow cytometry core facility in the UK. This is where he rediscovered beers from England, Belgium, Germany, and the Czech Republic, where craft beer is actually called beer! Back in San Diego, he realized that the beer industry had flourished, and craft beer and food and beer pairings were now the norm. He became a home brewer and, eventually, bought a brewing license with some friends. Local bars and restaurant liked his beer, but he and his partners decided to raise some capital and expand beyond their cool place in North Park. They are building a facility in Barrio Logan and, although there have been some challenges, things are moving along nicely.
The Great American Beer Festival in Denver, CO is widely considered to be the Super Bowl of beer, with over 7,000 beers competing for 280 medals. Winning a medal is quite an achievement, and San Diego brought home 18 of them in 2016. Duck Foot Brewery won a silver medal with its Contender IPA with Fresh Chilis, and New English’s Zumbar Chocolate Coffee Imperial Stout, which uses coffee beans from the local coffee shop Zumbar, won a bronze. Eric did not win anything this year at the GABF, but his success in other competitions speak for the quality of his product.
Dark days in the brewery business
Brewing beer is not always fun. Frictions with business partners can happen in breweries like in any other start up. People put their savings in the business, money can be tight, and disagreements can ensue. Nonetheless, working through the differences and looking at the big picture can help create a great culture.
Non-human related problems can happen, too. Lactobacillus infection can be devastating for a barrel aged imperial stout and, if it happens, one just needs to throw away the whole batch, with big losses. In the long run, it is better to throw away one batch than to ruin one’s reputation by bottling a subpar product.
Investors may be necessary in a brewery like in any other business. Equipment and facilities are expensive, so brewers need capital if they want to expand. Sometimes investors are just friends and family, and sometimes one can meet them via networking. In other cases, investors come to you. One advantage of having a tasting room is that people, including investors, get to know you, your product, and your business, and may want to invest in it.
It may be challenging to create interesting content for the various social media outlets, and it can be a lot of work for a small business, but nowadays having a social media presence is a must. Eric used social media to advertise some funny beer competitions for cash prizes. These competitions may not have been a great return on investment for the brewery, but they created a lot of traffic and people had a lot of fun!
This article was originally published by Roberta Alexander on LinkedIn.
By Neil Thompson, Patent Agent & Writer
You have an invention idea and you apply for a patent application. But what if someone has already patented that idea? All your hard work has been in vain. You wouldn’t have had this problem if you had done a prior art search before filing the application, though.
A prior art search is a search for all patent applications and patents that are related to your invention idea. There are companies whose sole job is to do prior art searches. They have access to databases from around the world and can provide you with a list of patent applications and patents related to your invention. A patent practitioner can take that list and look through all the applications and patents and see what they claim. If he thinks that your invention can claim something that’s different from what’s claimed in the list, then your invention may be patentable.
There are some patent practitioners who do their own prior art searches. They most likely don’t have access to all the databases and tools prior art search companies have access to, though. Going through a company that routinely does prior art searches will likely give you a more comprehensive list. The bigger the list is, the less surprised you’ll be by the patent examiner looking over your application. The examiner will do his own prior art search and come up with his own list. You want your list to match his list as much as possible. By having access to more databases than a patent practitioner, a prior art search company is your best bet of your list matching up with the examiner’s list. You’ll be more prepared if the examiner issues a rejection of your application based on a document on his list.
If your application is likely to face rejection, wouldn’t you like to know that beforehand? Doing a prior art search before filing an application can save you a lot of money in patent practitioner fees, filing fees, and other fees. A typical prior art search can cost around $500, but don’t skimp on this step. $500 early on trumps thousands of dollars of fees later on.
This article was previously published at http://www.neilithompson.com/. Thank you to Neil Thompson, patent agent & writer, for sharing with our SDEE community.
San Diego Entrepreneurs Exchange is proud to co-host the Hera Venture Summit on September 17, 2016. This one day event will feature panel discussions, keynotes and interactive sessions to inform and connect female entrepreneurs and investors. Highlights will include tips from Barbara Bry (Blackbird Ventures), Kim Kovacs (Golden Seeds SoCal), Regina Bernal (USD School of Business Administration), Lorine Pendleton (Pipeline Angels), Tyler Jensen (The Startup Garage), Trish Costello (Portfolia), Felena Hanson (Hera Hub), and Silvia Mah (Hera Labs & Hera Fund),
Hera Venture Summit
When: Saturday, September 17, 2016 : 8:30 am - 7 pm
Where: University of San Diego, SoLES auditorium
Attendees: Entrepreneurs, Investors and aspiring angel investors who want to invest (resources, time and money) in women.
As a SDEE member, you will receive a $40 discount, just enter promo code SDEE40off when you register. For more details, please visit http://www.heraventuresummit.com/.
SDEE will be exhibiting at the Hera Venture Summit. Stop by our table to hear about our upcoming events and member news.
Hope to see you there!
June 23, 2016 Workshop: Perfect Pitch – For Creating and Delivering Winning Presentations
by Neil Thompson, Patent Agent & Writer
Does the idea of pitching an investor make you want to…abandon that idea? If so, you’re not alone. The pitch workshop, hosted by SDEE on June 23 at Hera Hub, was packed with people wanting to know how to perfect their pitch. Here are 10 tips from the experts. Specials thanks to our panelists Jeff Friedman (Tech Coast Angels), Larry Fromm (Achates Power), Diane West (2Connect), and Grace Chui-Miller (Correlation Ventures) for their nuggets of wisdom.
- Get the audience’s attention within the first minute (Larry says you have one minute to grab investors’ attention before they tune out. Facebook photos won’t scroll through themselves after all. Larry also says that if you have an hour for the pitch, do it in 20 minutes, leaving the rest of the time for Q&A.)
- Tell the audience a story (Diane understands that investors need data to make an informed decision about your company, but she implores people who are pitching to couch that data in stories. Kids like stories. Adults do, too.)
- Know your audience (According to Diane, the story that the pitch audience wants to hear will vary. The technology-minded will want to hear a technology story. The business-minded? A business story. Find out beforehand who will be in the audience to tailor the story to the audience.)
- Be honest about challenges (One of Jeff’s pet peeves is presenters that say they have no problems. There are always issues to overcome. Be honest about them. The investors, if they choose to take you on, may be able to help.)
- Focus on your strengths, not your competitors’ weaknesses (Larry is immediately turned off by pitch presenters who disparage the competition. Chances are the pitch audience knows your competitors and all their warts. Focus on the benefits of your product and how it addresses the problem you’re solving.)
- Don’t claim that you have no competitors (When she hears a pitch presenter say there is no competition, Grace thinks either the pitch presenter didn’t do his homework or is lying to make his product seem more novel. Acknowledge the competition. It makes you seem more knowledgeable of the market.)
- Don’t include financial models with dramatic increases (If you’re a pitch presenter, do you have a slide in your deck that resembles a hockey stick, rising uniformly over a 10 year period then leveling off? Ditch that slide. Grace believes that 2-3 year financial projections are the best a pitch presenter can reasonably estimate. 10 years? 15 years? No way.)
- Always have backup slides with more detailed information on hand (In Jeff’s group at Tech Coast Angels, the pitch audience is often mixed. For example, a scientist may have technology-related questions, so have slides available that would address them. Don’t present those slides unless asked, especially if the majority of the audience is not science or technology savvy.)
- Be confident, not arrogant (Diane’s view is that there’s a fine line between confidence and arrogance. The line consists of listening. Confidence is quiet. Arrogance is loud. Listen to learn the audience’s needs. Accept feedback.)
- Don’t try to get married on the first date (Larry is adamant that the purpose of a pitch is to start a conversation, not end it. Investors don’t typically write a check at the end of a pitch. The pitch is to get the pitch presenter to the next phase of the investors’ selection process. Hopefully, closing the deal will come soon enough!).
Neil Thompson is a writer, patent agent, and notary public among other things. You can read his musings on his blog “I’m not an expert. I’m just a guy who likes to think about stuff…” at neilithompson.com.
by Amy Duncan, Goldfish Consulting, Inc.
San Diego Startup week is an innovative weeklong conference that seeks to build an ecosystem of entrepreneurship in San Diego, provide resources for entrepreneurs, and amass a network of like-minded individuals to discuss common issues and share experiences. This year’s conference included a Bio/MedTech track with 15 events. I attended five of the Bio/MedTech sessions, held at the Sanford Consortium for Regenerative Medicine in La Jolla. Three of the sessions reverberated themes that included teams, partnerships, and licensing that I’ll cover in this blog.
Speakers and Panelists
Participants in “Starting a Biotech Company - JUST DO IT!!” included founders/CEOs Julio de Unamuno from LabFellows, Thomas Hitchcock from Xycrobe Therapeutics, Inc., Paul Laikind from ViaCyte, Zachary Zimmerman from Forge Therapeutics, Inc., Curt Becker from Molecular Assemblies, and Tim Mullen from Qusp Labs. Participants in “Licensing IP from UCSD and other Research Institutions” included Scott Forrest from BlackThorn Therapeutics, Paul Roben from UCSD, and Zachary Zimmerman. Participants in “Biotech Partnerships and Joint Ventures” included Greg Mckee from CONNECT, Jay Lichter from Avalon Ventures, Damien McDevitt from GSK, and Elizabeth Schwarzbach from Sanford Burnham Prebys Medical Discovery Institute. Participants in “What Biotech Investors Look For When Funding Startups” included Julio de Unamuno, Kara Bartone from JLABS, Stephen Connelly from BioMed Ventures, and Ron Shigeta from Indie.bio.
Building your Team
When de Unamuno asked whether the panelists preferred having loyal or independent team members, the founders unanimously agreed that loyalty and trust are fundamental. The panelists advised working your network to get recommendations for first hires, and that while having a rock star team member was clearly beneficial, they are difficult to lure. Founding team members are either senior level and in a financially secure position to take a pay cut and try something new, or desperately in need of a job. Once you build the lab and foundational data, you can leverage these assets to attract higher quality employees and prune those that don’t fit. The panelists underscored the value of people first, referencing the adage, “It’s about the jockey, not the horse.”
Bartone said one reason startups fail is when founders try to start a company part time, in off hours, or with no full-time employees. She said it’s hard to move a company forward this way. It was echoed throughout the track that few professors make it as a CEO straight out of the lab, and are typically unsuccessful at trying to be CEO and do the science at the same time. Panelists advise professors starting companies to find a business partner and maybe a post doc to run the science. Shigeta says his accelerator, Indie.bio, won’t invest in sole founders, citing that an entrepreneur needs to be able to talk at least one other person into joining them.
Being Coachable and the Ability to Pivot
In the early days of your startup, Shigeta says it’s common that no one knows anything about you, you have no track record, and you are your only asset. Investors look for “coachable” bright people who can take advice and step away from the science and be product focused. Shigeta encourages entrepreneurs to share their vulnerabilities and be open. Connelly underscored the importance for entrepreneurs to understand their technology as a product, where it fits, how it addresses an unmet need, and how it will move the needle. Bartone added that cheaper, me too, or slightly better won’t cut it. Shigeta said the product has to be spectacular. That being said, the final product probably won’t end up how it was initially envisioned. Being able to recognize when things aren’t going right and being able to pivot is critically important. All the panelists agreed that companies typically end up pivoting and pursuing different directions, further supporting the notion that you need a good, solid team to persevere.
Partnering with VCs and Biotechs
Typical VC firms are small with about four or five people. Getting time with a decision maker is hard to do. Lichter advises finding someone in the VC’s network and convince them to make the introduction. When you see a VC at a networking event, even if you’ve met before, Shigeta says the VC likely won’t remember who you are. Always be clear on who you are and be ready to deliver your quick pitch again.
The best way to establish a biotech partnership, according to McDevitt, is to talk to the people in business development at the company. Forrest and Bartone both raised the notion that you need to do your research on what areas and types of companies VCs and biotechs are interested in partnering with and investing in. For biotechs, they advised that you do your homework to understand their therapeutic focus areas and make sure your technology applies. Reinforce how your technology plays in their picture; indicate if it’s a new direction for them, a supplement or add on to an existing area, or how it grows one of their current franchises. Position your company on the role it will play for them, and how it will contribute to their growth, so they can pitch it internally. For VCs, know how much they are looking to fund. Know how much funding you need, based on the size of your team and phase of development.
Connelly says missing a good deal is what keeps VCs up at night. They don’t have a lot of time, so prepare a one-pager that describes your mission, the problem you are addressing, your proposed solution, how it’s different, how you plan to create value, the market size and non-obvious opportunities, and brief bios on the management team. Potential partners can look at the data later if they are interested. If there is interest, you’ll likely get invited to a follow on meeting covered by a non-disclosure agreement (NDA), but don’t feel pressured to reveal proprietary data. Even the VCs don’t want to open themselves up to liability.
If the investment community says “no” Connelly advises to be sure to understand why. Understand how each VC operates and what the motivations are. From a venture fund perspective, it’s all in the timing on how much money they raised and where they are in deploying the funding. If they just raised $100 million, they may want to fund an earlier/risky stage. If they’ve already deployed it and have some left over, they may not want to come in early and stay in the game long term. They may not have the money or buy in from their partners at that time. You may have to come back when the timing and funding is better, or when you have more data. But don’t stalk.
When it comes to universities and research institutions out-licensing technology Forrest and Roben said their strategy was to ensure their technology can succeed. Institutions wanting to safeguard their technology is the focus of the licensors’ program, not a small part that can be shelved or thrown away. They want to license to the partner “who’s going to love their baby the most.” The universities and research institutions are looking to partner with a team that has a plan, commitment and passion, and can execute. Forrest says it takes about 30 seconds to determine if the person is serious, experienced, and has a plan to take the IP forward.
Zimmerman noted that startups interested in licensing a technology typically want to test it out and see if it has legs, but can’t pay a lot of money for it, and investors aren’t interested in giving 5% to the university. To address this conundrum, he drafted up a letter of intent to obtain exclusive access to the university’s technology for 12 months. Zimmerman used the letter of intent as a tool to raise the seed round, which ultimately was used to pay the license fee, without giving away part of the company.
Finally, identifying the IP you want to license is not an exercise in simply reviewing a catalog of what’s available. Forrest said entrepreneurs need to either already know the professor behind the patent or be familiar with the area and understand its impact.
Words of Wisdom
Lichter said to plan for things not to go right, and that 95% of things we start will fail in this industry. Shigeta says that while you most likely will lose all of the investment, lose it responsibly and not painfully. Hitchcock said there will be anxiety starting a company, there’s no other way around it. The best way to diffuse stress, Mullen advised, is through talking about issues with the team. Laikind suggested that if an entrepreneur needs a support group, maybe that entrepreneur is not up for the task. Fortunately, there are conferences like San Diego Startup Week, organizations (SDEE, CONNECT and Biocom) and incubators/accelerators (JLABs, Indie.bio and Lichter’s COI Pharmaceuticals) to help entrepreneurs network, meet advisors, and establish a network of support to tap into along the way.