One of the biggest challenges that all of us have within the Garage Biotech space is financing a start up venture, we face somewhat similar challenges to entrepreneurs in the tech space but bootstrapped Biotech start ups have the additional problem of requiring potentially more capital intensive equipment and usually working with more “buggy” biology (cells, DNA/RNA and molecules are very sensitive to environmental changes and hence even minor changes can ruin weeks/months worth of work).
One key entrepreneur and venture investor that I’ve followed over the last decade or so has been Guy Kawasaki, if for no other reason that he provides salient words of wisdom but in a very entertaining format to budding entrepreneurs and has been doing since the early days of Apple computers.
In one of his articles, Guy talked through some of the finer points of “The Art of the Start” and I highly recommend reading his original article. I’ve simmered down some of his key points and connected it to some of the lessons I’ve learned and observed in the biotech industry.
- Early Cash flow is king – Not Profits! : This is a tough one for us in the land of biotech start ups as it’s often touted that it takes 7-12 years to develop a therapeutic and anywhere between $800M-$1BN USD to get a therapeutic drug approved by the FDA. Statistically, this may be true (and I wouldn’t want to doubt Tuft University’s numbers in aggregate) but the reality of it is that a really solid platform technology with proof of concept data (even in vitro) could be enough to raise, angel, venture or even grant funding and I have known of Biotech entrepreneurs in the past that have been able to raise substantial sums (in the millions) of even non-diluting grant funding from the government and non-profits. Other interesting models are starting a service business (even if only temporarily) or in the medical device/tools space it may be possible to start selling/partnering your technologies sooner to jump start a positive cash flow.
- Bottom up forecasting is the way to go!: market segmentation is a class that’s taught in business schools globally and can also lead to some pretty confused thinking for first time entrepreneurs if you listen too much to your B-School Prof theories on assessing essentially established markets and apply that rational to tiny or non-existent but rapidly developing markets. It doesn’t really matter if the market for your particular drug/device or service is in the billion dollar range, your market size might be limited to the 10 researchers that would be willing to try out your device in the first year in their lab or how much you can get for your first licensing deal in year 1. My advice is to see past the excel worksheet and really think about how you personally will sell your biotech product!
- Truly understand that you’re building a scrappy start up (under staff and chose your battles): this is perhaps my favourite of Guy’s points and links in with cash being king, for a bootstrapped start up you have a precarious lack of both time and money, this means on the one hand you should buy as much off the shelf (rather than bespoke) equipment as possible but on the other hand realize that you will likely have to under staff your start up initially to gauge the true level of resource need but be careful not to fall foul of any existing rules or regulations in our highly regulated industry (OSHA being just one example)!
I’ve highlighted a few points that I felt are particularly important to bear in mind as you start up your projects/garage biotech. The catch in our industry of course is that there is a vast difference in how you’d structure your project/biotech dependent on your individual focus, be it tools, devices, diagnostics or therapeutics.
I’m always interested in finding out more about how innovative Garage biotech’s have surmounted these challenges so please feel free to get in touch or leave a comment.