Entrepreneurs want to create businesses that make money.They recognize and accept risks and devote significant time and energy to build a business. People that have a great idea and contribute the intellectual information or property to a New Co can be scientific founders, but they may not have an entrepreneurial mentality. They are not able to accept risks, fail to have time, and are not able to devote their full attention to building the business. Businesses do not develop without significant sweat and energy from an enthusiastic team willing to contribute time and money.
Investors are people that contribute value to businesses in return for equity. The value can be in the form of intellectual property or money. Investors can be on the Board of companies and provide oversight and direction. Scientific founders can be investors by contributing their ideas and advice. They can also serve on Boards and provide their leadership of the development.
Scientists sometimes wish to create startups so their technology has a home to be developed. If the scientist does not have a business counterpart, there may be insufficient business leadership for the company. Companies with science and no money tend to be more difficult to fund, unless the science is disruptive, unique, and highly exciting.Companies without sufficient business leadership tend to stagnate and have difficulty gaining investor support. It is important that scientists wishing to create a company understand the financial and personnel requirements to obtain funding and they should have the time to participate in a significant way to the development of the business.
Starting a business is not the same as being in a prestigious club. One must carefully consider the positives and negatives before starting a company when one has no time to devote to it.You may be able to obtain the rights to technology or already own them, but real advancement is not likely without people and MONEY! There may be other alternatives to advancing the technology like licensing or partnering.You still have the bragging rights but without the need to commit significant time or funds.
Before you decide to start a new business, consider the following questions:
- Why: What are the reasons you wish to start the business? The primary reasons should be to advance the technology to commercial readiness for a product launch. The business is the vehicle for this. The company may be acquired in the future or you may elect to retain ownership, but the objectives are to develop and commercialize a product.
- Desires: What do you hope to gain? You may desire to gain recognition for the contributions, make money, or own a business. You may not want a boss any longer and desire to be independent. Making money is a desire whether it is a salary or big money from an exit: ownership in a business can provide both. Starting a company to gain control of a technology can be costly. You must realize that it takes a significant commitment of time and money before you can make money!
- Time: How much time do you have to devote to the company? If you are not able to break from your fulltime work, you may need to commit money and technology. Involvement as scientific founder may be essential for the success of the business. Starting a company and having no time suggests that you could consider being an investor of sorts. It is critical to explore whether you have the time available for participation in the business.
- Resources: What resources are required, including people and money? The ability to obtain the resources is critical. You may wish to start the company and have the ability to do so, but the company will not move if inadequately funded and the right type of talent is not available.
- Involvement: Do you really want to be involved as part of the team? You must have the time and desire to work at no salary for some period. Startups have no money on day one! It can take months or years to receive funding, and sometimes they never receive any funding. Giving up your day job and going “all in” on the startup is a risk you must be willing to accept. Starting a company does provide permanent control over the technology or business. Co-founders, staff, and investors will dilute your ownership: especially, if you are not part of the team.
- Decision: You are motivated and want to build a business. Your interest is being more than an investor. You have the time and excitement about the new opportunity. You recognize the resource limitations and can accept the risk. Now you have a more solid basis to make an informed decision!
You can follow Taffy Williams on Twitter by @twilli2861 and you can email him with questions at twilli2861@aol.com or contact him via company contact info in the website. More Startup information is contained in his personal blog.
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