The majority of aspiring business owners hope to launch a firm one day, but they frequently lack the knowledge necessary to accomplish it. A business cannot be launched haphazardly. Starting a business needs extensive preparation, and for it to be successful, several things must happen at once.
The effective synchronization of timing and opportunity is often referred to as “serendipity,” whereas other people refer to it as “chance” or “luck.” Whatever name you give it, remember Louis Pasteur’s adage that “chance only favors the prepared mind.”
Since there are so many tasks to complete, it might be difficult to know what to start first. Here is the complete entrepreneurial guide for biotech startups.
Identify the Market’s Need
Though all excellent ideas are just that—good, not all of them result in the things we need. Recognize that a lot of fascinating innovations are still looking for a commercial necessity. Make very certain that your upcoming product will indeed fill market demand.
Additionally, confirm if the relevant technology is covered by intellectual property rights (IP). Next, if you are not one of the inventors or other important personnel, obtain their assets, intellectual property rights, and commitments. These individuals possess the necessary expertise to ensure the technology’s success.
Identify Founders and Key Individuals
Any company’s success depends on having competent employees. Make sure you carefully identify these people and comprehend their interest in and dedication to the upcoming company. Not everyone who expresses interest at this point should become a founder of the business.
All founders never receive the same amount of equity compensation, unless everyone plans to work full-time for the firm once it has received funding. It might be challenging to calculate ownership percentages.
You don’t want one founder to receive the same stock ownership who will not be working for the new company but maintains stable employment with a respectable salary and relies on the success of the other founders.
Find a Reliable Lawyer
This person is an important companion. You will turn to your lawyer for suggestions, direction, advice, and, of course, legal solutions. Throughout all phases of starting and expanding your firm, they will assist you in navigating corporate and commercial challenges.
You will memories this person’s phone number within the first week of operating your business. They must, therefore, be someone you can trust and get along with. Above all, they must be qualified professionals with extensive experience guiding emerging biotechnology enterprises.
Get Investor Interest and Incorporate your Business as a C Corporation
Obtaining funding and/or government SBIR (Small Business Innovative Research) grants will be your next goal. Both of these things are impossible without a corporation. The ability to issue founders stock without having to pay high prices for shares (or face significant tax repercussions) due to the relatively low valuation of the firm at this early stage is one of the numerous benefits of early incorporation.
Most businesses would first form LLCs in their initial phases before changing to Delaware C Corporations, which have more benevolent corporate regulations. Biotech companies should be C Corporations rather than LLCs once they start to see success and investor interest.
Respect your Investors
Before meeting with investors, do some research on them. Discover their investing preferences and the industry they often operate in. In terms of the specific application (if you have multiple potential ones), quantity to ask for, and usage of the cash, this will help you spin your narrative effectively.
You will undoubtedly hear the notion at some point that you shouldn’t discuss science with investors. Be aware that this is a misconception; knowledgeable life science investors will want to comprehend the technology they are investing in. In God we rely upon, all others must bring data, said engineer and statistician William Edwards Deming.
Compared to you, your investors will be more knowledgeable about the market. Therefore, you do not need to focus on the fact that cancer is a serious issue. Even before they become your investors, heed their advice. You can improve your strategic thinking and find possibilities thanks to their understanding.
Without a well-written business plan that outlines the market issue and demand, how your solution will create revenue, what you plan to do with the money, and the return and exit for the investor, and the key employees inside the firm, it is hard to obtain capital.
With the assistance of your attorney, draught your business strategy. They’ll assist in transforming this into a fundraising document (private placement memorandum). Following that, you will look for an audience with the relevant investment groups interested in your stage and industrial area.
Manage Company Virtually
Maintain your day job! Carefully establish the business while lowering your risk. Brick and mortar are not required at this point if you have a computer, a phone, and access to the internet. However, make sure you have access to a conference or meeting room and hold off on paying for rent just yet.
Take caution when working on your new business and doing any tasks for it while you are still an employee at your existing place of employment. If you start your new firm using company resources, such as time and/or space, there may be legal concerns around ownership. Make sure to talk to your lawyer about these matters.
Constantly Progress the Technology through Subsequent Product Development Phases
Make sure to list all of the significant product development milestones that increase value across the whole product development process. After that, show consistency in your development by hitting the first several of these goals on schedule.
Investors enjoy learning that a company is moving forward steadily following a predetermined development path. You will boost your company’s worth and lower investment risk if you achieve important deadlines on time. Consistency in achieving scheduled milestones raises the possibility of obtaining further funds.
These steps are crucial fundamentals to complete an entrepreneurial guide for biotech startups. The time required to finish these tasks might range from two months to two years. The shortness of this article is not designed to minimize the process; rather, it is meant to make clear what is necessary in achieving this aim.
There are many more processes involved in the beginning and growing a biotechnology firm than those that are included here. When founding a biotech firm, these processes may occasionally be performed in a different sequence, but they are all necessary.