Business Startup Considerations for Scientists

      by Linda Wraxall, originally published in The Vortex, February 2006

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Dr. Sadiq Shah was invited by Marinda Wu and the California CAT Employment Committee to give a condensed version of his two-day workshop on entrepreneurship for scientists. Along with the Women Chemists Committee and the Business School at St Mary’s, Moraga, they sponsored a one day seminar on Saturday 12th November 2005, which was a pleasant Fall day on a beautiful campus in a spacious room of the Soda Center.

 

Dr. Shah began his talk by explaining what an entrepreneur was and applauding the 29 participants, some of whom had never attended an ACS meeting before, for investing in their future by staying indoors on a sunny day! He went on to say that the old business model of graduating, keeping a job for 30 years and then retiring had been overtaken by the new ones of “Let me find a trend and get a niche in it” or “What’s going on so I can design my own future”. Those who are successful follow the principles of “learn – unlearn – relearn” and this workshop gave an overview of all the aspects of a business startup. Dr. Shah pointed out that these create a win/win situation for both entrepreneur and society because once an unmet need is identified, the entrepreneur can go on to create a market for the product or service or technology. He had observed that many scientists are often not clear what a business plan is or why it is even necessary. A technical background is not important because one can partner with an engineer or scientist with that kind of know-how. Extra help can also be sought from a university or a federal technology transfer center. However, although they are mandated to license and transfer technology to the private sector, they are the ones who will hold the ownership rights to that intellectual property. He then went on to describe how to protect this intellectual property through trademarks, trade secrets, copyright and patents. For instance, something that can easily be copied needs a patent but if it is hard to “reverse engineer”, a trade secret might suffice (e.g. Coca Cola’s formula is known only to two people). He also dealt with ownership rights (e.g. “a patent is a sword not a shield”) and the different terms and options of protection.

 

After that, Dr. Shah explained the different phases of a successful business: the stages of enterprise, the evaluation of opportunity, the development, growth and expansion phases, the final review and the all-important business plan. He looked at financing categories and the seven sources of capital, going into some detail about angel groups, venture capital and Small Business Innovation Research (SBIR) and Small Business Technology Transfer Research (STTR) programs. The latter are grants, being neither debt nor equity based, and encourage joint ventures designed for specific technological areas. Their goal is to create jobs, enhance the participation of women and minorities and to generally improve the quality of life for everyone. They support the development of high risk technology and the commercialization of innovative technology. There are many advantages to using these programs and, to be eligible, one must run a for-profit small business of less than 500 employees, be located and operated within the U.S. and be 51% owned by a U.S. citizen. The SBIR program is structured in three phases: technical feasibility (Start up), prototype (Development) and manufacturing and marketing (Commercial), which are funded differently to each other. The STTR program is similar but involves partnership with a university or federal lab and the Principal Investigator need not be a small business employee. It has the same three phases but, being a federally funded program, there is a lot more paperwork to explain how your proposal fits into their big picture.

 

Dr. Shah was a very clear and able presenter and his PowerPoint slides were intensive but not overwhelming, considering the amount of information he had to offer. Somewhere in all this we ate lunch, not willing to miss one word. This showed in the type of questions that were asked and it was obvious that this kind of workshop will be very useful to everyone concerned about their future and bold enough to take control of it.

 

Photos by Alex Madonik