Creating a biotechnology or pharmaceutical company is always a dream of the entrepreneurs that work in the space. The landscape hand exit strategies have changed dramatically over the last 10 years, but this has not deterred the creation of new companies. Innovation parks have been created in a wide range of geographic areas and encouragement is provided to help with the new Startup Companies. The primary purpose being that one of the best way to create jobs in a region is by creating new companies.
The following may be useful for entrepreneurs in general and especially those competing in these events in coming years. For entrepreneurs wishing to create a new technology or biotechnology company, a critical step has been reached in the process; i.e., taking action to create a company. The process varies with the individual, but these are some of the critical steps and a little about how to accomplish them.
Pick Technology Area
The technology area may be something you are currently working on or an area you follow. If you do not have a favorite yet, a good place to start is an area you have passion for, or at least can develop the passion. It may be healthcare, green, energy or some other area. At least be excited about what you will be doing because you will be living with it for quite a while. You may have some very difficult times ahead of you and working on a technology you hate does not help at all. After all, growing a business is not for the “faint of heart”. You can be certain that your excitement will carry through in seeking raise capital and developing a successful business. Also, it will fuel your drive to learn all you can about the topic of your business and become the expert in the space.
Intellectual Property & Licenses
Find intellectual property (IP) in the forms of patents or pending applications. You may have your own ideas and patents, but it is possible to seek technology from other sources. Searching for technology is not difficult, but it does take a lot of work. Universities are often the best place to start. Most universities have a Technology Transfer Office that will manage IP and handle licensing of patents generated at that Institution.
The Association of Technology Managers has some resources and connections to universities. One can also go direct to a university website and look for the group that handles the licensing. Often, the office will have a listing of available technologies and these offices are seeking entrepreneurs to develop a business around the technology. Better yet is to develop a relationship with someone at the technology transfer office and let them know what is desired. It may not be invented yet and you can request an alert if a patent application comes across the university or government agent’s desk.
If you have a favorite scientist, request info about technology available by that scientist or discuss with the scientist how to gain access to the IP through their University. Be careful, in nearly all cases, the scientist (professor) does not own the rights to their inventions, the university does. Make sure to deal with the correct person or entity that owns the IP.
Obtaining a license or patent will cost money. The patent process alone is expensive and the license adds to that expense. Be prepared to spend money or at least negotiate to pay in the future for the rights to the technology. It is recommended that entrepreneurs not borrow against their house or other assets for payments, placing those assets at risk should the business fail.
IP is essential because it protects the company from any competitor that may want to sell the same product(s); the IP helps develop a “real monopoly” for a product. The IP also addresses a question of “what makes the business special.” This will be a question in diligence reviews by investors.
It is common that many new entrepreneurs license IP only to discover the IP does not adequately cover enough of the field, or that the patents exist in a field so cluttered that there is no real room to operate. The “Freedom to Operate” issue is a true concern. Most inventors do not realize that having a patent gives the ability to prevent someone from selling a product, not give permission to sell a product. Always fully examine the IP landscape to make sure the product is free and clear of blocking patents; a patent that prevents a step in the process or covers a related area.
It is possible to save a bit of money by searching on www.uspto.gov for IP. Issued patents and some applications are listed and searchable. You may even decide to seek patents to license via searches. It is a useful site and worth time learning how to use it. There is a similar site for foreign IP but a bit more complicated to cover all locals.
Suffice it to say, the new company MUST have knowledge and ownership which can allow you to have an ability to commercialize something with minimal or no competition. Otherwise, it will be much more difficult to obtain the needed funding; especially true for the biotech space. It is not recommended to use competitive product pricing or cost of goods as the only distinguishing characteristics for the company. You are much better off telling investors the company has a monopoly in the area based on IP. Part two here
You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at firstname.lastname@example.org or contact him via company contact info in the website. More Startup information is contained in his personal blog. His photography is also available on line.