Will we ever see a biosciences startup school?

I was thinking about entrenched network-effect value that internet startups capitalize on.

http://en.wikipedia.org/wiki/Network_effect

Part of the value of a website (particularly a web2.0 type of site) is pre-established, inherent connectivity. The fact that the hardware/startup costs are minimal is related to this. You only get network-effect value if a lot of people are connected, and you only get a lot of people connected if you have cheap hardware.

Given that, it seems to me that one big step toward moving science based startups in that direction is to build a cheap and versatile platform that is easily connectible. Open science as a cultural idea is like the old pre-internet BBS system – the structure is there, but the masses (such as there are in science) have not flooded in.

I think there's a slow adoption of open-source science because standardizing and sharing data is scary, expensive and has a steep learning curve for scientists used to doing what they are already good at. If there were a cheap, easy, connectible platform such that experiments were easy to perform in a standard way and then the data were easy to share, then there would be a much lower barrier to entry for startups, but also an entrenched decentralized value upon which to capitalize.

Commercial science is slowly moving towards a networked model (I have been sitting on a blog post on this for weeks). More out of necessity than anything else (traditional models are broken, the research is too big for one organization). I do think that to achieve that, the core has to be open data and collaborative research/shared IP. In other words, you're right on track

And due to the entrenched network effect commercial science is actually probably moving more rapidly than academia. They have the imperative and they have a better understanding of their IP position and how to protect that position while releasing information.

I believe that's true. They do have a better understanding. You will see more and more pre-competitive information being shared, especially as a new generation of CIOs/CTOs come on board

I've been peripherally involved in biotechnology business education for many years. My text on the topic is being used by dozens of schools around the country. I think the previous commentors have covered a lot of the core elements.

Another factor I'd like to introduce is that bio-entrepreneurship is often directed at the wrong audience. While principal investigators (professors) run the labs which have lucrative technology, they're often ill-positioned to capitalize on it. They've got established jobs and they're good at the grant-winning, paper-writing career model. Bio-entrepreneurship needs to be directed at grad students and post-docs. These are the people who are incentivized to make nascent biotech ventures work. They're hungry and looking for a career, and they don't have a safety net.

That said, entrepreneurship in biotechnology is VERY different from tech entrepreneurship.

Deepak, great post. I'm actively trying to find good resources for learning how to straddle biotech industry and academia, and successfully navigate the trailsand travails of a startup, all while trying to keep my day job.

I've got a "me too" observation, and a couple of resources to share.

I've got to agree that the entry cost and long time to revenue combine to make life sciences startups really different from the tech world. Startup teams have to have a handle of not just building a product that solves a problem, but must contend with an entirely differnet world of intellectual property and regulation, to just name a couple of areas. And investors who focus on tech have an entirely different sense of scale and returns. Paul's Y Combinator is a great example of this -- they make seed investments for around $10K-$20K for 5-10% of a company. Not bad if all you need is a server to start scaling up, but it won't go far in the life sciences world.

That said, I do think there are cheap startup niches for companies that can leverage informatics and other technologies where the costs are on a downward spiral (sequencing comes to mind). And that creative bare-bones purchasing and leasing can go a long ways.

Two resoruces to share:

Standford's Biodesign program has periodically organized Emerging Entrepreneur's in Biomedical Technology, a truly excellent program that brings industry legends and funders together with pre-startup folks. I can't say enough good about it. Tends to be focused heavily on clinical applications and medical devices, but it's like a life sciences MBA compressed into 3 days.
http://www.stanford.edu/group/biodesign/emergin...

Linda Holroyd's FountainBlue is a sort of DIY school of life sciences entrepreneurs. She organizes meetings and panels on basics and on trends. What's really nice if you're not in the San Francisco Bay Area is that she publishes great summaries. If you're local, the networking is excellent, too.
http://www.fountainblue.biz/

Stanford also sponsored a Bio Bootcamp a few years ago. I participated representing a VC and our firm was the co-sponsor. Although the phone rang like mad afterwards, there were never any viable opportunities in which to invest. The problem seemed to be that the room was filled with academic scientists who knew someone who had "gone startup" but they had absolutely no understanding of the business issues. The disconnect is extreme when they hear that their technology +/- commercialization strategy are going to be massively diluted by investors and that they won't be rich immediately or CEO ever. It was very frustrating to see technologies with potential be thrown under the bus out of total ignorance.

Indeed, that is quite true.

One more thing to add and this shows the failing of the system. Many universities have some incubators, but more often than not, these are nothing more than exercises at capturing some additional funding using the SBIR framework. Most of the "companies" never really have a plan to do anything significant.

Depak, interesting idea. I was at Startup School both last year and this year. Most of the attendees I talked to, as well as the presenters, were working with the Web. See, for example:

http://paulgraham.com/ycombinator.html

I don't think that's an accident - it takes almost no capital to get going on a Web startup. In other words, economics of Web startups are extremely unrepresentative of the larger economy. Unfortunately, your typical biotech or chemistry startup will require much more in funding, resulting in much more up-front control by funders, and it won't be able to iterate on its products nearly as quickly.

If somebody came along with a way to do a biotech startup in such a way that it could be done in a garage for peanuts while working a day job (or doing an undergrad degree), a Bio Startup school would be inevitable.

Still, there may be nontraditional paths that could offer a lower barrier to starting bio- or chem-oriented startup. There may even be a business model in providing the tools to make that happen...

Rich

Very true. Having spent time in both worlds, the obvious differences in cost, risk, etc are fairly obvious. It is also clear to me that the traditional commercialization and funding models for biotech etc are also not quite right.

My question was more generic. Right now the path from academic research to commercialization is based on a model that does not work, e.g. the person who does the work might not get as much work as the PI who might have limited involvement. There is too much control via the University tech transfer office and the current investment model. Too many young scientists are completely unaware of how to commercialize good ideals and the models for seed funding to test out proofs of concept are not too good.

That's what I would like to see. A place for entrepreneurial young scientists to come together, to understand the risks and to find out what it all means. In addition, there has to be a change in commercialization models. They just don't work too well IMHO.

>There is too much control via the University tech transfer office and the current investment model.

Where does this control come from and why are founders so willing to cede it?

From my perspective, founders have no choice in the matter; the monumental startup costs and positively geological time scale of product development compared to the Web space mean (a) there's almost no room for error; and (b) large amounts of money are needed from the get-go.

I may be missing something, but this sounds like a recipe for dependency.

The University simply plays the role of VC by absorbing certain startup costs. And they rightfully demand a return on their investment. The prospect of losing so much control so early in the game must discourage more than a few would-be biotech entrepreneurs. And those discouraged entrepreneurs probably pass on their discouragement to their students.

The reason that YC is getting the kind of attention it is, aside from being genuinely interested in helping startups succeed, is that commodity hardware and free developer tools have created a huge pool of talented people with little to lose by starting up - and everything to gain if they're successful.

(The power of free or very cheap means of production has also created a generation of entrepreneurs who think that you can build a business without collecting money from your customers... but that's another story ;-)).

To me, the cost of entry is the #1 reason why the chem/bio startup space is so unlike the Web startup space.

When it's as cheap to start a biotech as it is to start a Web startup, then we may well see a Bio YC. I really do look forward to it.

How can we make it _cheaper_ to start a chem/bio startup?

I don't yet know how young life scientists might best be educated to "think startup". However, I can tell you that academic institutions are getting better at providing career development options for scientists - certainly much better than in my day! There seems to be more of a focus on ensuring that students are employable when they graduate, rather than assuming that they all want to work in their field of study. That may be good or bad, depending on your viewpoint.

At my current workplace for example, there are a lot of seminars and workshops about the intersection between research and business: commercialising your research output, managing IP and so on.

However, I suspect that what you're getting at is how to make life science researchers think more like startup entrepreneurs: be innovative, take risks with left-field ideas, find financial (and other) support, be collaborative. That's altogether more difficult! Especially in academia which by and large supports only safe, traditional, slow and steady research ideas. That's mainly because funds are so tight - who's going to risk getting no return on a mad idea?

Neil

I am glad to hear that. I've seen (esp in the late 90's, at the peak of the genomic boom), too many companies that did not really know how to make a business successful.

But you're right. I was referring to a mindset, one that encourages independent thinking and self-starting. Difficult in the current funding environment as you note. How does one define a return? How does one measure success. That's the discussion we are having these days and what I hope drives change.

No.

let me know when you get it going ;)

I'll let myself know too :)

Rich

We can't really compare the YCombinator model as is to the biotech situation. As you point out, hardware is a commodity and developer tools are free, which biotech requires capital costs and a fairly skilled labor pool, which isn't always easy to find.

Of course a lot of us reading this blogs are the informatics types, so we could in theory start companies with relatively low capital costs (and I'd like to see more people give that a try).

What I am trying to derive is a change in culture, a move away from these dependencies, a move away from the current tenure-track based academic model. Change the kinds of exits possible, which could possibly reduce the costs of a chem/bio startup.

We could discuss this at length in person some day :). Love the questions you are raising. Personally, as drug development becomes more and more virtual, i.e. you don't have one big pharma company doing everything, but more of an ecosystem based on collaboration and IP sharing, then we might get some traction.

In the meantime, you should grab a copy of "Science Business" by Gary Pisano. It suspect you'll really appreciate it.

visit www.kgi.edu
you will find out more

In Toronto, I recently helped organize the SciBarCamp unconference (www.scibarcamp.org), which brought together scientists, entrepeneurs and artists, amongst others. Our goal wasn't nearly as directed as what you're suggesting in the post, but it did nonetheless get some of the scientists and entrepeneurs talking.