If you were planning to use your research to launch a start-up company, would you expect to be the CEO? It’s one of the most important questions you can ask yourself if you plan to start a business, according to science business adviser and lawyer Christof Hettich, partner at law firm Ritterhaus, managing director of science investment fund dievini and an honorary professor at Heidelberg University of Applied Science.
Speaking at this week’s Naturejobs Career Expo in Heidelberg, Germany, Hettich said that while you can learn the skills you need to lead a business, it takes time and could detract from your core strength — your science. “You have to learn to delegate and trust in other people,” he says. While the founder of a company often wants to be the CEO, particularly in Europe, it’s not always good for business. “You have to define from your side where you can help the company the most,” says Hettich, adding that not having the right CEO is one of the main reasons businesses fail.
Eschewing traditional business-textbook tips in favour of his personal experience, Hettich highlighted three key areas: the science, building a sustainable organisation and venture capitalist funding.
Be the best or the first — and protect your IP
In order to form the basis of a new company your research should either be the first or best of its kind. Anything less than that might be suitable for an existing company to add to its portfolio, but “it’s not enough to start a business”, says Hettich. “You need to be very early and the best in your field.”
As the backbone of your potential business, your intellectual property (IP) is a precious commodity. “You have to pay unbelievable attention to creating and protecting your IP,” says Hettich. That doesn’t mean you should just create patent after patent — Hettich advises you develop a proper strategy — but you do have to be very careful about what you publish about your research before you have a patent in place. If you involve a venture capitalist to get funding (see below), they are likely to uncover any problems with your patent during their due diligence checks.
As well as deciding on the right CEO, make sure you pick an appropriate chief financial offer (CFO). Although crucial, this position is often assigned to an existing acquaintance, which can cause problems as the business grows. “That’s not really a sustainable model,” says Hettich.
Understand venture capitalists
When it comes to funding, make sure you plan ahead. Venture capitalists (VCs) — those who invest money on behalf of a private fund — will only invest if they have a clear idea when and how they can withdraw their investment in the future to achieve a healthy return. VCs may also be influenced by what’s currently ‘fashionable’ in science, making some areas more likely to attract investment.
How do you choose which VCs to approach? It’s “easier to convince VCs familiar with the industry,” says Hettich. He also advises checking at which stage of a business the VC usually invests, as this will vary.
Finally, VCs have experience in building companies, so be prepared to be challenged as well as supported. “You will get additional help, whether you want that or not,” says Hettich.
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