The following is a transcript from a talk I gave at the medical device development course, Brigham and Women’s Hospital in Boston on May 12, 2016.
Due to length, I have broken the talk up into seven parts:
Part 1: Why do this? – I describe the pros and cons of engaging in a translational research venture. It is definitely not for everybody.
Part 2: What you need to do before you start – I assumed that we were interested in pursuing science translation through entrepreneurship and discussed how best to start.
Part 3: Identifying milestones – I discuss the milestones that you need to achieve in order to see a product through to completion.
Part 4: We established a timeline and budget around these milestones, and recruited our team to begin “de-risking” the venture.
Part 5: Leaving academia
Part 6: Questions and answers 1
Part 7: Questions and answers 2
In Part 5, now that you’ve done your homework, you’re actually ready to start a company. To do that, the first thing you probably want to do is find yourself a corporate law firm – ideally a large law firm that has substantial experience dealing with startup companies. The reason I say that is because you still don’t have any money and won’t be able to pay their fees. A law firm that has got substantial experience working with startup companies will perform their services for dramatically reduced costs and will offer delayed payment. The firm that we worked with offered delayed payment for up to two years, so that gives you the wiggle room you need to get all the legal work done properly and still be able to pay them, hopefully, when you’ve got some money. And they understand that if you end up not having any money, they’re not going to get paid.
Once you’ve started the company, you now need to start raising money. You should start with money that you can get from grants in your academic lab and slowly transition to grants that go entirely to the company, and probably along the line you’re going to start bringing in private investment to the company as well.
This is the list that I was fortunate enough to be able to raise money from: It starts with Brigham Research Institute and the Boston Biomedical Innovation Center. These were both grants given to my academic lab. There is also Harvard iLab, which is an incubator at Harvard University that sort of bridges the gap between an academic project and a startup company. Then you’ve got things like MassBio and MassCONNECT, Mass Life Sciences Center – these are state grants for the company. The NIH Small Business Innovation Research grants represent substantial amounts of money, again targeted specifically to the company.
And, most importantly, there is bootstrapping, which is putting your own money into it and that of friends and family, which you are surely going to have to do. If you’re not comfortable taking your parent’s money, because you’re afraid they’ll lose it, then maybe you should consider not starting the company. (Please appreciate that this assumes your parents have both the desire and the financial security to invest; I am simply making the point that you should treat other people’s investment like you would your own parents’ or yours.)
Now that you’ve got a little bit of money, you need to begin negotiating your intellectual property. I’m assuming that all of the work you’ve done so far has happened in the academic setting, and while you might be the discoverer and have done all the work yourself, the intellectual property lies with the institution. And so, when the company is started, it might be using your technology but the company needs to negotiate with partners for rights to that technology, and that turns into the licensing agreement. You have a tech transfer office at the university that negotiates on behalf of you, mostly on behalf of the institution for that intellectual property, but the company needs its own legal counsel because in this sort of scenario, you can very much be in opposition.
The same rules apply with intellectual property lawyers as they do with your corporate law firm, in terms of a large company that has experience with startups. You might specifically want to find an intellectual property law firm that has experience in your area.
Once you’ve done all of that, it’s very important that you also find a private incubator space. You cannot do company work in your academic lab, the institution just won’t tolerate that. In Boston, many incubators are beginning to pop up. These are fully fleshed out lab spaces with all of your core facility equipment – flow cytometers, clean rooms, microscopes, biological safety cabinets, fume hoods, micropipettes, etc. You typically will need to pay for that private lab space, which is why raising the money comes first.
There are incubators that will take equity in exchange for the services they provide, but I would strongly discourage that – there’s no need to. You should be able to find a lab space that can supply your needs for a reasonable cost. In our case, there are companies like Amgen that run business competitions. They had a business competition, for which the prize was free lab space at LabCentral for one year. We were fortunate enough to win and that’s where we’re currently located.
In summary, you need to be sure that this is what you want to do, make sure you do your due diligence, and once you know that this makes a lot of sense, commit mind, body and soul.