What do entrepreneurs and investors expect of you and what should you expect of them? The criteria many large pharmaceutical and medical device companies apply to potential development projects generally cover the following areas:
Scientific Confidence. This criterion must be established over time and the levels of technical risk that are suitable for an entrepreneurial venture are likely to be too risky for a large company to undertake. Over time, the proposed mechanism of action must be supported in laboratory experiments.
Unmet Medical Need. If a product would only marginally improve treatment for a disease or if sufficient treatment already exists, then it is difficult to justify investing further time and money.
Large Market Opportunity. This area is largely self-explanatory and is covered more in depth below.
Adequate Market Protection. It is critical that there is broad intellectual property protection, so that the company can be assured of recovering the large R&D costs of developing a product.
Bring someone onto the team with significant Food and Drug Administration (FDA) experience or consult an FDA regulatory consultant early on.
The FDA regulatory path and navigating it successfully is a whole topic unto itself and cannot be adequately addressed here. Suffice it to say that it is important to find someone who is highly regarded to guide you through this area.
Broad patent protection
It is best to have a broad patent (or series of patents) that is hard to invent around and could feasibly block competitors from encroaching. Speed to market, trade secrets, and relationships with key companies with complementary resources, such as a strong sales force or strength in clinical trials, can also be effective.
Strong involvement of the founding scientist
Whether it's working directly on the technology, consulting to the startup, or recruiting scientific advisory board members, or senior scientists, it is crucial that the founding scientist stays involved.
Multiple co-founders, including at least one with a sales and marketing background
It can help enormously to get a marketing person involved early on. While it might be cost effective to delay bringing in a marketing person until more of the R&D has been done, on average there is a tendency to wait too long and this can lead to mistakes.
Product oriented (not consulting or research)
At times it can be a good strategy to earn some revenues by doing contract research or selling research tools while building up the platform. However, be aware that this carries the risk of diverting precious attention from the real work of building the core product.
It is easy for technical founders to become too focused on perfecting the technology or adding features. Being customer oriented means understanding and solving the customer's needs well and doing nothing extraneous to that. In the case of epilepsy, this may be more complicated and mean understanding exactly what the patient needs or how physicians will think about side effects, or insurance companies will think about reimbursement.
Considering all sets of customers and stakeholders
This is related to the previous point, but is worth emphasis. The product's customer and the customer for the business (large companies) are both equally important. This also includes the FDA and reimbursers. There should be early meetings with the FDA and consideration of the best regulatory path.
Founders with prior successful startup experience or experience at prominent firms in the same industry Studies of entrepreneurial performance show this to be one of the most important success factors.
Large market opportunity
If you are asking venture capitalists for more than $5-10 million, then as a rule of thumb, they will want to see at least a $1 billion market. Not every business needs to fit the venture capital model, however. Nonetheless, founders should always try to pursue the largest market possible or have strong reasons for pursuing a more niche market.
Successfully manage the challenges posed by growth
Rapid growth in a start-up can be challenging in many ways and just when a start-up begins to become successful, the ensuing chaos can often strain it to the breaking point. Successful founders should always be seeking advice from the Board and thinking a couple of steps ahead of where the business is currently.
Roberts, E.B. 1991. Entrepreneurs in High Technology: Lessons from MIT and Beyond. Oxford University Press. New York.