NYC Seed Announces SeedStart 2010 Summer Program

 
I was speaking with Owen Davis last night and he mentioned that no one in the Columbia entrepreneurship community had yet applied for this new summer program. The deadline is approaching so if you didn't know about it yet, there's still time to throw your hat in the ring. Here are the details:

NYC Seed Announces SeedStart 2010 Summer Program-$20k for up to 10 startups for the summer

SeedStart will offer promising teams the chance to build a technology product and launch a company with the assistance of seed investment capital, mentorship and other resources.  Companies will be selected through a competitive application process and each company will receive a $20,000 investment. Throughout the summer, companies will also receive mentorship from experienced New York City based venture capitalists and entrepreneurs, legal and business guidance, administrative help and technical assistance.  At the end of the summer venture capitalists and angel investors will be invited to an Investor Day where each team will present their product and launch their company.  SeedStart will run for 8 weeks beginning in June of 2010.

SeedStart is a joint effort among Contour Venture Partners, IA Ventures, NYC Seed, RRE Ventures and Polaris Venture Partners, and also includes Fish & Richardson, Manatt, Phelps & Phillips and Silicon Valley Bank.  The program has begun accepting applications and teams of at least two founders can apply here:

http://www.nycseed.com/seedstart.html by February 28, 2010 to be considered. 

For information, contact Owen Davis at owen@nycseed.com.

The Verdict on Raising Venture or Angel Money "Pre-Anything"

This is part of my Series on Venture Capital and Angel Investing.

I have the privilege of meeting a lot of entrepreneurs in my dual role as technology investor and university entrepreneur-in-residence. Many of these entrepreneurs are first-timers and are out looking to raise capital for their fledgling companies which very often have no product, no team and no customers. A good number of these folks are also under the illusion that there are investors out there that would be interested in providing them with seed capital nonetheless. This is simply not how things work in the overwhelming majority of cases.

Here are a few quick thoughts for those of you out raising money pre-revenue, pre-customer, basically pre-anything:

• At this point you need to realize that your sources of funding are limited to either grants, friends and family money or your own money. 
• Without some traction in the form of a product, customers, revenue and other proofs of concept, very few investors in the world will even consider investing in your company.
• The sooner you accept this reality, the better off you will be, because you will be spending your time achieving these milestones as opposed to wasting your time trying to pitch investors.

Are there exceptions to this? Of course there are.

• Biotech/Drug Discovery is one of them. For example, if you are a world class scientist in biotech and make a break-through discovery in an area with a huge market and demonstrate this with animal studies, investors will be breaking down your door.
• If you are a serial entrepreneur with a big success or two under your belt, you will be able to raise capital, oftentimes from investors who have backed you before, even if you are at the idea stage.
• Lastly, if you have what I call the X-Factor, then there are no rules. You will be able to inspire certain adventurous investors to bet on you and help you make your vision a reality.

For the next post in this Series, click here.

The Parable of the Venture Capitalist, the Entrepreneur and the Professor

 
This is part of my Series on University Entrepreneurship.

Entrepreneurs and venture capitalists know all too well that launching a successful startup is perhaps one of the most challenging and difficult of all human endeavors. (Please note my stress on the word "successful"). We've also learned that only a small sub-section of the human population are actually suited for this line of work. (They all must share some rare strain of DNA yet to be identified!)

I also like to say that there is actually an even more difficult endeavor. And though I say it in a tongue-and-cheek way- it's actually true. In my opinion, launching a successful university spinoff is much harder. 

The higher degree of difficulty has everything to do with the fact that the entrepreneur/vc/angel has the added hurdle of navigating the oftentimes arcane atmosphere of a given university before he or she can "spin-out" the technology. And depending on the particular university, this process can take anywhere from a couple of months to over a year!

You see, unlike a "normal startup", launching a university spinoff involves such steps as identifying and validating the university intellectual property, cultivating a strong relationship with the professor and the students in his lab, building a relationship with the appropriate people in the university's technology transfer office, and ultimately negotiating a license agreement and stock purchase agreement with them. This will entail agreeing to diligence milestones, sub-licensing fees, minimum annual royalties, reimbursing patent costs incurred by the university, paying royalties back to the university once you have a product and often making the university a minority equity partner in your venture.

It takes a special kind of person to pull all of these moving parts together and it is more than many seasoned entrepreneurs and/or investors can stomach. "It takes forever to get anything done there.... Why should I pay royalties to the university? ... The IP is just sitting there in the lab and I'm the one that's going to create all the value!", are all common refrains I have heard many times.

Mind you- these reactions are totally legitimate and natural without a doubt. For many, it may certainly not be worth the effort. Yet these criticisms always overlook a couple of key points about the nature of university technology that should be mentioned. First, some of the best and most commercializable work going on within the academy is world class and has often been under development for years- in some cases for almost a decade. Second, it is often the case that hundreds of thousands, even millions of research dollars have already gone into the underlying work by the time the entrepreneur/investor shows up for the first time. In many such cases, there is enormous value waiting to be unlocked. This would no doubt have something to do with the stunning historical IPO rate that university spinoffs enjoy.

Probably the most important and overlooked point of all, however, is the fact that the professor has often devoted his or her entire professional life to this work! In many cases these professors are world experts in this particular domain/technology.  This can simply be a priceless asset! Involving the professor as your chief scientific advisor and equity partner can thus bring with it an enormous positive effect.

I've actually posted about bridging this cultural divide between VC, Entrepreneur and Professor before, and have advocated for cultural sensitivity on both sides. Upon reflection I've come to realize that this is really not enough. After four years and with some fifty plus university spinoffs under my belt, I now understand that something much deeper needs to occur, and in this sense, a university spinoff is no different from any other startup. It will always be a story of human relationships and how successful and enduring these relationships will be. So now we arrive at a university spinoff distilled to its very core:

It is the parable of the VC, the Entrepreneur and the Professor...

It is their story to write and it will be a human story about their relationships, their level of trust, their communication and their collegiality and fellowship. 

If it is a story rife with avarice and smallness and conflict- all is lost and we have a failure on our hands. Time, money and resources will have been wasted. Years of people's lives. It is a tragedy.

On the other hand, if it becomes a story of respect, of trust, of friendship and cooperation, we have the necessary foundation upon which a successful university venture can flourish. I have not seen it work any other way.

For Part 25 in in this Series, click here

Notable News: "Read All About It"

WSJ "Recession? Economic Boom? No Effect on Startup Creation"

NYT “Detroit Entrepreneurs Opt to Look Up”

Cleantech “President Obama Awards $2.3 Billion Tax Credits for Cleantech Jobs”

Fred Wilson "Plant More Seeds vs. Tending The Crop"

Stuart Ellman “VC Expiration Date”

Dan Rua “HELP HAITI”

Notable News: "Holiday Edition"

NYT: “The American Diet: 34 Gigabytes a Day”
PEHUB: “Memo to Congress: “Legal Issues Taxing Carried Interest as Ordinary Income”
Law: "An Inside View of Wilson Sonsini's Fabled Investment Fund”
Dan Rua: “How to Approach VC’s”
Business Insider: “5 Small Business Marketing Trends for 2010”
Cleantech: “Top 10 2010 Predictions”
SAI: “The Biggest Losers of the Decade”
Washington Post: “Walker Ventures Succumbs to Bad Economy”
Quick Sprout: “Why Entrepreneurs Shouldn’t Write Business Plans”
Business Insider: “What Does An Entrepreneur-in-Residence Do?”
Mark Suster: “What Makes an Entrepreneur – Street Smarts”

Lastly, you've got to see this tremendous Holiday Card from First Round Capital. Fantastic stuff really:

First Round Capital 2009 Holiday Card from First Round Capital on Vimeo.

Notable News: "Read All About It"

1) Fred Wilson “Swinging For The Fences”

2) WSJ “Twitter Founders: From Stupid Idea to Possible IPO”

3) VentureBeat “10 Lessons In Bootstrapping a Company”

4) Beyond VC “The Googlization of IT”

5) Entrepreneur “9 Vital Statistics for Tracking Site Traffic”

6) Redeye VC “VC – “Back to the Future?”

Notable News: "Read All About It"

1) WSJ “This Year’s Top 10 Largest Venture Funding Deals”

2) SAI “Google & Twitter Sign Search Deal”

3) NYT “Microsoft’s Bing to Integrate Twitter & Facebook”

4) VentureBeat “Are You Creating Or Stealing Customers?”

5) Nate Westheimer “Thesis Driven Startups & Innovating”

Venture Capital: The Elusive Anti-Portfolio: A Rare Sighting

This is part of my Series on Venture Capital.

In that we were speaking of "negative" or "anti-portfolios" in this earlier post, just have a look at Bessemer Venture Partners' vaunted list below and the sometimes hilarious explanations they give for having passed on the opportunity. They've been in business since 1911 and obviously have the sort of self-confidence, sense of humor and terrific track-record to put some of these mammoth misses up on their own site. How many VC's would advertise the fact that they turned down the likes of Google, FedEx, Ebay, PayPal, Apple, Cisco and others of this ilk? ( Of course, just have a gander at their top 50 exits and you'll see why they feel as if they can).

My favorite line is the pass they took on PayPal: "Rookie team, regulatory nightmare, and, 4 years later a $1.5billion acquisition by Ebay." 

This one's pretty good too:  "Whatever the reason, we would like to honor these companies -- our "anti-portfolio" -- whose phenomenal success inspires us in our ongoing endeavors to build growing businesses. Or, to put it another way: if we had invested in any of these companies, we might not still be working."

		A123 Systems In 2004, Northbridge and Sequoia offered Rob Chandra an opportunity to invest in the A123 Series C financing. Rob thought the world would have to freeze over before GM and Ford would seriously support battery powered cars. Sure enough, in 2008 Lehman collapsed, the world nearly froze over, GM restructured itself and emerged from bankruptcy with an appetite for building an electric car. A123 went public in 2009 with a $1.3 billion valuation.
		Apollo Computer (acquired by Hewlett Packard) BVP's Felda Hardymon was offered a small position in the company's last private round, and waved it away: too small a position, he thought, at too high a price. In less than a year it was worth 17x.
		Apple Computer BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVP's Neill Brownstein called it "outrageously expensive."
		Check Point In 1994, Gil Schwed pitched his idea to BVP's David Cowan, who said that Gil would never get distribution in the US. The next year, Check Point got a huge Sun OEM deal and sold $25M of firewall software.
		eBay "Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass."
		Federal Express Incredibly, BVP passed on Federal Express seven times.
		Google Cowan's college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to "these two really smart Stanford students writing a search engine". Students? A new search engine? In the most important moment ever for Bessemer's anti-portfolio, Cowan asked her, "How can I get out of this house without going anywhere near your garage?"
		Ikanos Rob Chandra met these guys in 2000 at the start of the telecom meltdown, and remembers saying something like, "Rajesh, I like you a lot but do you really want to build a communications semiconductor business right now?" He looked at Rob in a sort of funny way and then raised money from Greylock, Sequoia and others. They are now running at a $60 million revenue run rate by focusing 90% of their effort on the telecom boom in China.
		Intel BVP's Pete Bancroft never quite settled on terms with Bob Noyce, who instead took venture financing from a guy named Arthur Rock.
		Intuit Along with every venture capitalist on Sand Hill Road, Neill Brownstein turned down Intuit founder Scott Cook. Scott managed to scrape together only $225K from friends, including HBS classmate and Sierra Ventures founder Peter Wendell, who personally invested $25K to get Scott off his back.
		Lotus and Compaq (formerly known as Gateway Computer) Ben Rosen, one of the founders of Sevin Rosen, offered Felda Hardymon the chance to invest in both Lotus and Gateway Computer on the same day. Says Hardymon: "Lotus wasn't proven yet, and I was worried about the situation there. As for Gateway, I told him there was no real future in transportable computers since IBM could do it."
		Paypal David Cowan passed on the Series A round. Rookie team, regulatory nightmare, and, 4 years later, a $1.5 billion acquisition by eBay.
		StrataCom (acquired by Cisco) Felda Hardymon: "[Sierra's] Pete Wendell asked if I'd like to look at Stratacom, which was doing a 'fast packet switch.' I gave him a blank stare."

Notable News: "Read All About It"

1)    Chris Dixon “What Carries You Up Will Also Bring You Down”

2)    Mark Peter Davis “Evolve Your Financial Model”

3)    Entrepreneur “10 World Changing Green Trends”

4)    John Addison “Al Gore Prioritizes Energy Innovation”

5)    SAI “10 Huge Successes Born From Early Failures”

Notable News: "Read All About It"

1) Bo Peabody (WPost) “Twitter.org?”

2) John Tozzi “Smart Grid Will Spur Energy Entrepreneurship”

3) The Deal “Angel Investors Fly to Quality”

4) Scott Anthony “What Baseball Can Teach Us About Innovation”

5) Reuters “Angel Investor Makes A Mint”

A Sampling of Commercial Products Using Columbia University Technology

This is part of my Series on University Entrepreneurship.

 Above I’ve posted a graphic showing some of the many products that have been developed in whole or in part from the intellectual property emerging from Columbia University’s many labs. Almost all of these represent IP licensed directly to industry by my colleagues at Tech Ventures, Columbia’s Technology Transfer Office. One can see everything here from life-improving and sustaining drugs to BluRay technology to the technology behind the Iphone’s screens.  With an average of 50 industry licenses, 100 sponsored research agreements, and 12+ spinoffs per year coming from Columbia alone, one can see that university tech transfer across the country has had an enormous benefit to society. The original vision behind the Bayh-Dole Act is definitely working.

For Part Eighteen in this Series, click here

Notable News: "Read All About It"

1) Silicon Alley Insider "Working Hard is Overrated"

2) VentureHype "Ready to Become an Angel Investor?"

3) WSJ "Where Twitter Ranks in Venture Funding History"

4) VentureBeat "Green Investing Bounces Back From Recession"

5) Larry Cheng "Who is the Venture Capitalist's Customer?"

Some Examples of Private Sales and IPO's from Columbia University's Startup Portfolio

This is part of my Series on University Entrepreneurship.

 In the coming weeks I’ll be discussing the popular Entrepreneur Office Hours Program we launched at Columbia University’s Venture Lab some months ago. The program is open to anyone in the Columbia community and is scheduled on a rolling basis by appointment.

In the meantime, for all you fledgling entrepreneurs out there in universities around the country and overseas, I thought I’d begin to post some inspirational information on some of the successful exits Columbia’s portfolio companies have enjoyed over the years. Here are a few examples below. 

Aton Pharma (Acquired by Merck for $150 million; NYSE: MRK)

http://www.merck.com/

The company is developing cancer drug targets based on research from R. Breslow of Chemistry and Sloan Kettering technology. Lead candidate is in Phase I/II clinical trials. The company was acquired by Merck for $150 million on February 2004.

CallStreet (Acquired by FactSet for $7 million)

http://www.callstreet.com/

CallStreet is the leading provider of corrected and formatted transcripts of management conference calls to the investment community. Hundreds of leading firms rely on CallStreet for the most accurate, highest quality content available. The company was acquired by FactSet in May 2004.

Corixa (Acquired by GSK for $300 million)

http://www.gsk.com/

Corixa is a biotechnology company involved in the identification of novel genes. The company develops immunotherapeutics that treat and prevent autoimmune diseases, cancer, and infectious diseases by understanding and directing the immune system. Corixa was acquired by GSK for $300 million on May 2005.

CoTherix/Exhale Therapeutics (Acquired by Actelion Pharmaceuticals; NASDAQ: CTRX)

http://www.cotherix.com

CoTherix is a biopharmaceutical company focused on licensing, developing, and commercializing therapeutic products for the potential treatment of cardiovascular diseases. CoTherix went public at the NASDAQ for $30 million in October 2005 and was purchased for $420 million by Actelion in November, 2006.

Electro-Optical Sciences (NASDAQ: MELA)

http://www.eo-sciences.com

EOS is a medical device company focused on the design and development of a noninvasive, point-of-care instrument to assist in the early diagnosis of melanoma. EOS went public at the NASDAQ for $20 million in October 2005.

Memory Pharmaceuticals (NASDAQ: MEMY)

http://www.memorypharma.com/

Memory Pharmaceuticals, a biopharmaceutical company, is focused on developing innovative drugs for the treatment of debilitating central nervous system disorders, many of which exhibit significant impairment of memory and other cognitive function. The company went public at the NASDAQ for $35 million on April 2004 and was acquired by Roche in 2008.

Mycrocept (Acquired by Healthpoint)

http://www.healthpoint.com/divisions/surgical/

Mycrocept develops, markets, and distributes a variety of innovative pharmaceutical infection control systems, its flagship product being an antibacterial surgical hand scrub to the hospital market. The company was acquired by Healthpoint for an undisclosed amount in October 2005.

Nephros (AMEX: NEP)

http://www.nephros.com/

Nephros was founded in 1997 by Columbia University health professionals, scientists, and engineers to improve the quality of life for the end stage renal disease patient, while addressing the critical needs of the care provider. The company went public at the AMEX for $12.6 million in September 2005.

ParAllele Biosciences (Acquired by Affimetrix; NASDAQ: AFFX; Department-Genomics and Development, Eric Schon)

https://www.affymetrix.com/corporate/parallele.affx

ParAllele Bioscience is now part of Affymetrix. Not only does ParAllele bring innovative assay technologies to the Affymetrix technology portfolio, but working with their talented team of scientists, Affymetrix can continue to build on the underlying molecular inversion probe technology while expanding the applications capability of the GeneChip® platform. The company was acquired by Affymetrix for $120 million in October 2005.

Pharmacopeia Drug Discovery (LGND: NASD)

www.pharmacopeia.com

Pharmacopeia is a biopharmaceutical company developing small-molecule therapeutics to meet the needs of large patient populations suffering from significant unmet medical needs. Pharmacopeia's programs leverage the company's immunobiology expertise and are focused on diseases such as rheumatoid arthritis, multiple sclerosis, and psoriasis. The company was purchased by Ligand Pharmaceuticals in 2008.

Progenics Pharmaceuticals (NASDAQ: PGNX)

http://www.progenics.com/

Progenics is a biopharmaceutical company focusing on the development and commercialization of innovative therapeutic products to treat the unmet medical needs of patients with debilitating conditions and life-threatening diseases. Their principal programs are directed toward symptom management and supportive care, human immunodeficiency virus, or HIV, infection, and cancer. The company has four product candidates in clinical development and several others in preclinical development.

Renovis (NASDAQ: RNVS)

Renovis was a science-driven, biopharmaceutical company that sought to discover, develop, and commercialize therapeutics for major medical needs in the areas of neurological and inflammatory diseases. The company went public at the NASDAQ for $66 million in February 2004.

Sentigen (Acquired by Invitrogen; NASDAQ: IVGN)

http://www.sentigen.com/

Sentigen Biosciences, a wholly owned operating subsidiary of Sentigen Holding, has developed a proprietary drug discovery platform that has the potential to change the paradigm of modern-day pharmaceutical discovery and development. The company was acquired by Invitrogen for $26 million in September 2006.

SGX Pharmaceuticals (NASDAQ: SGXP)

http://www.sgxpharma.com/

SGX Pharmaceuticals is focused on the discovery, development, and commercialization of innovative cancer therapeutics. Its mission is to provide patients with life-changing therapies through the dedication, innovation, and excellence of its employees. The company went public at the NASDAQ for $24 million in February 2006 and was subsequently bought by Ely Lilly & Co. in 2008.

Skinetics (Acquired by Sirna Therapeutics Inc., which was subsequently acquired by Merck; NYSE: MRK)

http://www.sirna.com/

Based on technology from Dr. Angela Christiano's lab in Dermatology, Skinetics focuses on hair loss and growth. The company was acquired by Sirna for $2 million in December 2004, and was subsequently acquired by Merck.

System Management ARTS (Acquired by EMC)

http://www.emc.com/products/software/smarts/smarts_family/index.jsp

System Management ARTS is a leading developer of software to automate management of complex networked systems and identify network problems in real time. The company was acquired by EMC for $260 million in December 2004.

For Part Seventeen in in this Series, click here

Notable News: "Read All About It"

1) WSJ "America's CTO Challenges Tech Sector"

2) NYTimes "Twitter Confirms New Funding"

3) D. Shah "12 Facts About Entrepreneurs That May Surprise You"

4) This Is Going To Be Big "Retraining Wall Street"

5) Scott Anthony "My Best Innovation Advice? Be Promiscuous"

Breaking the Century Mark: Celebrating 100 University Spinoffs at Columbia University

This is part of my Series on University Entrepreneurship.

 Upon spinning-off 13 companies from Columbia University in FY 2009, we at the Venture Lab realized that we’d now eclipsed the century mark with over 100 spinoff companies historically. We were also heartened by the fact that over 30 of these had been venture-backed at some point in their life-cycle, over 20 had either been sold or gone public and among them they had created in excess of 1500 jobs and raised over $1 Billion in venture capital.

It’s a testament to all the great work being carried out by the faculty and grad students in the 7,000 plus labs at the University, by the business school’s entrepreneurship center and by the talented entrepreneurs and investors who stepped up to take fledgling ideas and transform them into commercial ventures.

It’s also just a snapshot of the emerging behemoth of university entrepreneurship being loosed upon campuses around the country. 

(Above find just a few of Columbia University’s portfolio companies)

For Part Sixteen in in this Series, click here

Notable News: "Read All About It"

WSJ: "Jim Breyer & Tim Draper at Odds on VC Outlook"

Chris Morris (VentureBeat): "Is the Tech Boom Over for Entrepreneurs?"

Anthony Ha (VentureBeat): "New VC Marc Andreessen Joins HP Board"

Venture Hype: "How Successful Angels Invest"

Larry Cheng: "The Most Expensive Commercial Real Estate in the World is A Place for Computers Not People"

Google Acquires University Spin-off ReCAPTCHA

This is part of my Series on University Entrepreneurship.

 Another success story in the annals of university spin-offs hit the wires today. 

Hearty congrats to MacArthur Genius Luis von Ahn and his colleagues at Carnegie Mellon School of Computer Science. Their spin-off company, ReCaptcha was acquired today by Google. You can find Google’s announcement here and additional information here. 

The company came up with a clever and effective variation on traditional CAPTCHAs by using words scanned from old books and archives that computers find difficult to read.  In fact, more than 100,000 sites are currently using this technology. Google will go beyond this initial application however and intends to use the technology to greatly improve some of its own text and archival scanning projects, including Google Books. 

For Part Fifteen in in this Series, click here

Profiles in Entrepreneurial Courage: The Story of Bill Powell

This is part of my Series on Entrepreneurial Culture.

I was really inspired by an article I read in this weekend’s NY Times penned by Larry Dorman.  It’s about a gentleman by the name of Bill Powell, a veteran of WWII, a great-grandson of Alabama slaves, and a man who endured enormous indignities and discrimination but nonetheless persevered in achieving his entrepreneurial dream. His particular ambition was to design, build and run his own golf course.

Upon his return from the war no bank deigned to give him a loan and he was essentially denied the rights accorded to him in the G.I. Bill.  Unbowed, he managed to scrape together some seed money for his venture, borrowing from his own brother and from two black physicians. He then proceeded to handle the rest on his own and slowly and steadily built a golf course from scratch. He finished with the front nine in 1948. After earning the means to buy some more land, he completed the back nine thirty years later- in 1978.

Today his Clearview Golf Club of East Canton, Ohio is on the National Register of Historic Places and Mr. Powell, who is now 92 years old, will shortly be receiving the PGA’s Distinguished Service Award.

I write quite a lot about entrepreneurship and entrepreneurial culture and you can find my various posts on this subject here. These two passages below, however, said it all to me and embody somehow what being an entrepreneur is all about:

“He did much of the heavy work himself, clearing brush, pulling out fence posts and hauling away stones in a wheelbarrow. He seeded the fairways by hand, sometimes helped by Marcella, who died in June 1996 after 56 years of marriage.”

“He and my mother planted most of the trees you see there bordering the first hole,” she [his daughter] said. “When you think about what he was able to accomplish here, with everything that was arrayed against him, it really is quite amazing.”

For Part 6 of this Series, click here.

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London VC, "Does Operational Experience Help a VC?"

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WSJ on Andreesen

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University Spinoffs: Bridging the Cultural Divide

This is part of my Series on University Entrepreneurship.

 A big factor in having success spinning-out university startups is the ability to bridge the cultural gap between academia and the investment community.  I think about this divide a great deal, both as a long-time investor in this space and perhaps even moreso now that I am the director of a prominent university venture lab which spins out 10-12 new companies a year.

I was therefore delighted to recently come across this short post written by Amit Monga, Professor of Finance at the University of Alberta. He shares some excellent insights into the practice of investing in university startups courtesy of his prior experience as a venture capitalist.  Dr. Monga’s central premise is that investors want to see much more than technology when they speak with a university tech transfer office.  They are, after all, in the business of launching new companies, which require quite a bit more to succeed than the initial invention or discovery.

What really caught my eye, however, is his very first point which addresses the cultural divide to which I refer above. He points out that whereas it’s very much the custom in academia to focus on a professor’s achievements in research, (including his or her credentials, awards, honors, the number of grad students in their lab, etc.), the reality is that investors first want to hear a value proposition articulated for a potential business. Monga asserts that investors must actually have the answer to this question within the first five minutes of a pitch.

Having politely sat through quite a number of such lengthy introductions that never quite arrive at describing the “pain in the market”, I must wholeheartedly agree with Dr. Monga. In fact, I would say that this value proposition should be expressed within the first two minutes of a pitch.  If the investor is interested, there will be plenty of time to learn more about the professor’s academic achievements. 

I’ll go a step further on the subject of the cultural divide and say that I’ve seen instances where an investor’s motives are viewed extremely dimly by the academic. This too can be a problem.  Again, in this instance, it’s incumbent on the tech transfer folks to invite only the most reputable people into the university and to help work through any ingrained biases that might exist on either side.  For an eventual start-up to be successful, both parties will have to get along extremely well and will come to rely on each other. Start-ups are the very opposite of “arms-length” transactions.

So whether you’re an angel investor, a VC, an entrepreneur, a grad student, a post-doc or a university professor, it’s always valuable to approach university spin-offs with a great deal of cultural sensitivity and understanding.  I assure you, this sort of awareness alone can make all the difference.

For Part Ten in this Series, click here