Trying to start a business as a faculty member in academia? Don’t fret. As daunting as starting a company can seem, this blog will aim to give any prospective entrepreneur useful insights to getting started.
Jason Eriksen, Ph.D., an associate professor of Pharmacology at the University of Houston, has founded three different Biotech companies since he’s been at UH: Alzeca Biosciences, Teomics, and Swift Front.
Alzeca was the first company he co-founded with Dr. Ananth Annapragada, from Texas Children’s Hospital back in 2009.
“The mission of Alzeca is to develop an inexpensive non-invasive diagnostic test for the detection of Alzheimer’s disease and other neurodegenerative disorders,” Eriksen said.
The second company was Teomics that he founded to “develop better diagnostic tools for scientific and medical research.”
Finally, the third, and most recent, startup Eriksen founded was Swift Front.
“The mission of Swift Front is to develop a fully automated high-speed microscope platform that can be used to generate three dimensional images of whole organs or other huge objects at speeds 1000 to 10,000 times faster than what’s commercially available today,” he said.
Three Things to Consider When Starting a Company
According to Eriksen, there are three key things every faculty who wants to start a company should think about:
1. Mind the culture gap
Scientists evaluate research by considering whether it makes an original contribution to our understanding of the world. Businesses have a different rationale, which, by and large, is to make money. This engenders a huge culture gap. Your greatest, latest discovery in the lab may have no immediate practical application, and will never be of interest to businesses, unless it has the opportunity to become commercialized. As opposed to a company with an established business model, startup companies like yours will have neither an established technology, nor an established base of customers. As a founder of a startup, your primary mission is to identify who is going to buy your technology, and why they are going to buy it. Get out of the building to discover your customers.
2. Remember there is no single path to commercialization
It’s a very long road from an idea in the lab to a commercial success. There are many ways to go from the laboratory bench to the store, and commercialization is just like any business process. It’s part art, and part science; part inspiration and part perspiration. There are no shortcuts to becoming successful. So, if anyone tells you at the start that your idea is a guaranteed winner (or not), don’t believe them. There is a lot of hard work that has to be done to see if an idea can make it.
3. Stay self-funded as long as possible
Starting a business is one of the hardest things you’ll ever do. It takes time, energy, and money… a whole lot of money. More money than you have in your bank account (probably). Does that mean you need to find an investor? No. Avoid taking investments too early in the company. Whether you head to the bank, call a rich family friend, or tap an investor, you give up control as soon as you hold out your hand for money. Retain control of your business’s money, and you will keep control of your business.
Money is the Biggest Obstacle
Obstacles are inevitable when starting a new business. “Money makes the world go round, and one of the most challenging obstacles for any new company is to have enough money to keep moving forward,” Eriksen said.
Eriksen said his first company, Alzeca, was “self-funded for several years.” In order to move the company forward, they needed to seek non-dilutive forms of funding to develop their technology.
Types of Non-Dilutive Funding
- Grant Awards
- Bank loans
- (Forgivable) Loans from Family and Friends
- Licensing and Royalties from Products
- Tax Credits
Eventually, Eriksen and his team at Alzeca were ready for human trials and needed millions of dollars to do so.
“By this point, we were fortunate that we had an excellent team of founding members, consisting of myself, Dr. Annapragada, a founder with deep business experience and a CEO who did a lot of the actual fundraising for us. Together, the team was able to recruit investors with deep pockets, allowing us to move this technology forward,” Eriksen said.
Basic Checklist for Starting a Company
Beyond understanding the larger concepts behind starting a company and that money is essential, here are a few things to remember, according to Eriksen:
- Ask other entrepreneurs for advice
- Identify your target audience/customers
- Believe in your idea and don’t let anyone tell you otherwise. Work hard and see for yourself if the idea will work
- Seek out what resources your university offers for entrepreneurs
- Avoid taking investments too early in the company. Retain control of your business’s money, and you will keep control of your business.
- When it’s time to expand, use non-dilutive types of funding
- Have a strong team behind you that wants to see the company succeed
What’s The Big Idea?
Any aspiring entrepreneur who is considering starting a new company, but has no previous experience, should ask other entrepreneurs for advice. UH offers a number of programs that support faculty entrepreneurs such as the regional iCorps program and a growing Office of Technology Transfer and Innovation at the UH Technology Bridge. Be sure to check out your technology transfer office at your university to see what programs are available to support you as you get started.