If you’re a scientist looking to build a startup, good management is key

Check out the article regarding the VaBIO Greater Richmond Bioscience Luncheon that took place yesterday.

Research officers at Virginia’s universities grapple with a difficult task every day: helping scientists turn laboratory inventions into marketable products.

The trick, according to a group of bio-technology experts who gathered for a luncheon Thursday at the Virginia Biotechnology Research Park, is helping highly-trained scientists hone their business skills. The lunch was part of a monthly series organized by the Virginia Biotechnology Association.

“At the end of the day, if you’re looking to raise money, you’re in a sales mode,” said Mike Drzal, an attorney at LeClairRyan. “If you don’t have the basic sales tools nailed down, you are in for a rough ride.”

Drzal, who represents life-science entrepreneurs, said there are three key tools: an executive summary about your business idea, a business plan and a slide deck that explains your product. Drzal said he’s amazed how many would-be startups prepare for meetings with potential investors without a formal business plan. He said he always tries to stop them and make sure they’ve got well-designed plan.

Erika Smith, CEO of BioTherapeutics, has spent time on both sides of the investing scene. After years of working for small life-science companies, she now works as an angel investor. She said entrepreneurs should be sure to understand what drives different investors.

“What motivates angels can vary,” she said. “There’s some interest in [return on investment], of course, but there are other reasons for why people want to give their time, money and energy.”

One angel investor might have a special interest in funding companies pursuing cancer drugs or treatments, she noted. The interest in that sector may be motivated by personal experiences, such as losing a family member to cancer.

Mark Crowell is executive director for innovation partnerships at the University of Virginia. He said that when his office is working to help one of the school’s researchers, it prefers to back products that have “multiple applications across multiple markets.” But it’s even more important, he said, to find scientists who can be effective partners with investors and business executives, people who are “teachable” and willing to admit their ability to decode a genetic sequence may exceed their ability to prepare a balance sheet.

Smith, the angel investor, said the mantra of venture capitalists and other investors is “management, management, management. That’s what it all comes down to.”

Drzal said investors are looking for a “bankable” CEO, someone with proven business experience who can help guide the inventor. Not many people, he noted, can handle both tasks, especially if the person is continuing with other teaching and research duties.

“The other thing we look for is the King’s English,” Drzal said. “I see 50 presentations a year, and if I can’t understand it, an investor who doesn’t see that many of these definitely can’t figure it out. Don’t forget the importance of communicating effectively.”

Ken Carter, CEO of Nobel Life Sciences, says the inventor must understand that everybody has to win and get a return on the product for it to really grow and succeed.

“I tell folks that instead of owning 100 percent of a grape, you and the world will be better off if you own 10 percent of a big, juicy watermelon.

Drzal urged the scientists in the audience to “spend your time on what you know” and let other professionals handle the nitty-gritty details surrounding accounting, incorporation structures and other business issues.

“I often tell my clients, ‘I won’t be a biophysicist if you won’t practice law,’” he said.

Written by: Jacob Geiger
WorkItRichmond