Thursday, June 22, 2017

Getting Support for Your Life Science Startup

As a life scientist-entrepreneur, you are well aware of the value of mentors. In the process of education and early training, a life scientist engages with the number of mentors who provide support from the emotional to coaching to specific skills development.

In the life of the company, there are similarly multiple areas that require ongoing support. For example:
  • determining a valuation of the enterprise,
  • developing a marketing strategy,
  • determining when to seek out guidance and from experts such as accountants and lawyers.
At crucial points in career development, scientists receive key input. One framework when evaluating the need for entrepreneurial support is to consider the concept of a value event. In scientific training, one can imagine such an event would be an advisor who recommended classes to take as an undergraduate or a Ph.D. program or MD program which would meet professional and personal needs. In career development of the life scientist, a large number of individuals have guided the life scientist regarding scientific research at various key points. In fact, the decision to pursue an entrepreneurial path is such an event.

The concept of a value event applies equally well to the life scientist embarking on a business career. In business, there are similar milestones including:
  • determination of a need for additional funding and the amount of funding to request,
  • the timing of various funding rounds and the type of investor to seek, 
  • reassessment of team members and the need to alter or enhance the team to meet business goals. 
Life scientists additionally have value events related to the production of a pharmaceutical or device. These are clearly marked through various stages of clinical trials. The success or failure at these stages will dramatically affect the potential value of the startup venture. It is essential that the investor also understands the implications of such value events. A medical product with negative impact or no demonstrated value cannot ethically be sold. Investors must realize that one cannot market such products even if it is in high demand.

In the life sciences because of the need for vast capital and marketing expertise, a startup venture will rarely succeed as an independent body. Identify individuals who can assist with the most important event to investors, the sale of the company when the proper time comes. No doubt, the investors will be very interested in participating at this point; however, the entrepreneur must look out for both personal and business interest since the sale of the company may require ongoing effort as an employee or removal from the enterprise altogether. These are dramatic changes that will impact the scientific career of the life scientist-entrepreneur. Picking up a new biomedical path is not the same of as creating a new piece of software.

The Startup ProcessSourcing - Evaluating - Valuing - Structuring - Negotiating - Supporting - Harvesting

Reference: David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.

2 comments:

  1. Brad,

    Fascinating post. I don't know much about life science, but it does seem clear that there needs to be a collaboration when new life science ventures are started. I can imagine the high rate of failure that would happen if one person tried to do it alone. Aside from the insurmountable financial needs, as you say, the need for so much expertise is critical.

    Austin

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    1. Agreed, if starting a non life science company is hard, then I think a life science company is even more challenging. Plus the entrepreneur can likely fall into the trap of thinking "hey I am an expert in ____, I can do business". I've learned from my own efforts that one skill does not automatically transfer to another. But I do think that passion and grit do. With effort I think the life science scientist can become an excellent entrepreneur.

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