Last time, I listed my Top 5 tips
for aspiring CEOs of rare disease startups. It was directed at those who are frustrated with the status quo, have little or no experience with startups or even the business world, but are inspired by the rare mission. Now that you’ve been initiated, you’ve come back for more.
Here are 3 more tips that become pertinent after you put your business and scientific plans into action:
1) Six-month fundraiser
: Seed capital for startups that seek to translate publicly funded discoveries is hard to come by. The conventional but slow and tedious option that’s touted for being "non-dilutive
" is the SBIR/STTR grant mechanism. The catch here is hidden costs. Mastery of grantsmanship takes time and money, longer I would venture than it takes to master pitching investors, which requires only gumption and a decent slide deck. Grant funding is subject to historic levels of hypercompetition, so the risk of rejection is high and constitutes another cost in the form of resubmission. I went the angel investor route and was able to raise twice as much as a SBIR/STTR grant in half the time. Rejection by an investor is less demoralizing than rejection by a reviewer, because the cycle time of finding a new investor to pitch is much faster than the cycle time of a submitting (and often serially resubmitting) a grant application.
2) Team building
: Everyone talks about company culture and how hard it is to build. I add my voice to the chorus to describe the kitchen-sink process by which I assembled PLab’s team of scientists, the company’s most valuable asset. Hiring is always about finding a balance between the platonic ideal of meritocracy and your actual social network access. (There’s also the pay-to-play approach of headhunters and expensive job ads, but I’m assuming you're in lean startup mode). I met PLab’s first hire at the Q&A of an event where I spoke on a panel about biotech entrepreneurship. PLab’s second hire was recommended to me by a friend with many connections in the Bay Area startup scene. Hire #3 came via a cold email, and Hire #4 responded to a free ad I posted on a science jobs site. What unites all of us is a passion for solving orphan disease puzzles.
3) Advisors and consultants
: Chances are you aren’t a tenured professor funded by the NIH, a general partner at a life science VC fund, or a serial biotech CEO. They are the usual suspects when it comes to biotech company formation, for the simple reason that mainstream life science investors think decades of experience and achievement significantly increase the odds of future success. But if you’re building your rare disease startup from the bottom up, you’ll need seasoned advisors. Two areas require solid consulting from the outset: business development and medicinal chemistry. For quality people you must be willing to compensate them. I chose to compensate with a stock grant instead of cash. I wouldn’t worry about constituting a scientific advisory board (SAB) until later.