As a Professor at Northeastern U teaching graduate courses in Biotech Entrepreneurship and Leading Biotech Companies, I am constantly seeking the best approaches to creating and managing a Biotech Company. This term, I asked my students, “What are the key steps you would take if you were starting from scratch”? I was struck by how simple yet elegant one of their responses was and thought I would share it with you.
- First, I would identify an unmet need or problem and do the market research to make sure the market can sustain the solution. This would include researching if a similar product or service already exists, how many people are affected by the problem, how much they are willing to pay for the solution (and how much they can afford to pay), what are the regulatory obstacles and how much the business would need to earn to be sustainable.
- Next, I would search for the right people to staff critical positions in the company and figure out incentives for their involvement. I would bring in co-founders who provide complementary skills to mine and build an advisory board of experienced experts in the area. In terms of incentives, I could offer equity in the company. In addition, having a strong vision that inspires the team would be a must.
- I’d also try to get a good lawyer involved from the very beginning in order to set the company up correctly and to make sure my IP is protected.
- After securing the legal foundation of the business I would write a business plan (actually I’d start drafting it even earlier and it would be co-evolving with steps 1-3). In the business plan I’d identify the business model, what value the company brings to the market and how my product or service fits into the existing system and how it will make money, what are the risks and what are the timeline for development and calculate how much investment I will need to meat development milestones and how much investment I’ll need to get to the point where I can start making money. I would revise and validate the plan with my team and with potential my customers.
- With these foundations in hand I would start approaching investors, building relationships and raising capital. I would research my investors and target my presentation to their interests. Some places where I would start would be government grants (ex. SBIR or STTR), angel investors and venture capital firms, foundations, crowd-funding and private investors.
I’ve read many books on the subject and never seen such a simple, elegant summary.
For a more in-depth discussion of this topic, read Leading Science and Technology Organizations: Mastering the Fundamentals of Personal, Managerial, and Executive Leadership.
Stay tuned for my new free E-book coming out next month, On Becoming a Three-Dimensional Leader.