Managing the Spin Outs
Once they have the money
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USA UK Canada Australia Germany France
Income/company
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But Ken Snowden, Scottish Enterprise’s biotechnology director, said Scotland’s life sciences sector had enjoyed a 7.5% rise in jobs over the past year.
He said: "The industry has more than doubled over the past five years. There was a flattening of the curve last year. Companies are not growing as rapidly as they were, but they are growing more than the European average of a 10% decline."
Managing
The Spin-Out company
Startopoly
Startopoly
• how are the uni spin-outs progressing, what are the problems with the spin-outs, should the unis be taking a different approach to spin-outs/start-ups, how to manage the companies (Keith) once they have the money (again what are the common problems and how to prevent them)
Startopoly
• Getting a company started from University to Nasdaq….
• THE COMPANY VIEW
• Note.. Using the US rules and board…
Startopoly
• Getting started • Requires more than a
compound active on the enzyme/receptor of choice…
• There must be something to support the business as it starts and as it grows…
Startopoly
• Keeping focus.. • A university start up can
not guarantee the full-time commitment of the key people while on seed funding..
• Clear goals and milestones are essential
• Getting business development assistance can be crucial
Keeping Focus
• Need to find ways to keep support for nascent companies within the University system – sometimes this is not a natural synergy
• Need to find affordable location – remember competing with San Fransisco not Birmingham…
• Need International focus
Startopoly
• IP is great • but the costs rise as
time progresses, not necessarily best for a start up to be saddled with a huge portfolio…
Startopoly
• Grants can be wonderful..
• But there do seem to be more people employed as consultants to assist/assess than there is money in the system..
• Lets have a simple and fast way to support the business!
• One page per £25,000 in application….
Startopoly
• Once you start there is no stopping..
• Time is always in short supply before the next milestone…
• Make sure the next step is ready to go and does not have a six month lead time…
Startopoly
• Keeping up with the paperwork is essential!
Startopoly
• The first Round Proper
• Getting to the next round requires success and a big slice of luck
• While platform technology is still an ugly concept for some, it does help to pay the rent….
Cost of Capital
• Current models are not working
• Secondary investors are not prepared for reasonable valuations
• Primary investors are seeing too much dilution
• Alternative financing models are essential if the technology is going to be developed
Startopoly
• Service business is a good route to developing a cash flow and supporting internal development
• But if there is a larger goal it can be a distraction..
• Getting the balance right is a big issue
Startopoly
• A second round requires sights set on compounds/proteins which are heading to the clinic
• But are the big pharma companies starting to see the value in very high quality novel leads?
Startopoly
• Getting out on the road is essential
• Can’t spend the money until the well is dry and then seek another round, it is a continuous process of building the railroad
Startopoly
• Keeping Moving• Having a portfolio
approach of technologies or products or a mixture of technologies and products gives the best chance of intermediate deal making
Startopoly
• One shot products have a chance of failing which is high..
• Is the current trend towards “the clinic or bust” the right one for most start ups?
Startopoly
• Getting a product to phase 1 or at least something in vivo and toxicology so that results in man are not far away gives best chance of further funding by any route…
Startopoly
• Some things you don’t need to worry about….
Startopoly
• Being prepared for “windows of opportunity” is essential.. Moods change very quickly in the financial markets
Startopoly
• Sell a product in phase 2 or beyond and prepare for retirement!
• Do it twice and go for an IPO….