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From faculty to founder: What to know before starting a company, from a University of Houston expert

There are three key things every faculty who wants to start a company should think about. Graphic byMiguel Tovar/University of Houston

Trying to start a business as a faculty member in academia? Don't fret. As daunting as starting a company can seem, this blog will aim to give any prospective entrepreneur useful insights to getting started.

Jason Eriksen, Ph.D., an associate professor of Pharmacology at the University of Houston, has founded three different Biotech companies since he's been at UH: Alzeca Biosciences, Teomics, and Swift Front.

Alzeca was the first company he co-founded with Dr. Ananth Annapragada, from Texas Children's Hospital back in 2009.

"The mission of Alzeca is to develop an inexpensive non-invasive diagnostic test for the detection of Alzheimer's disease and other neurodegenerative disorders," Eriksen said.

The second company was Teomics that he founded to "develop better diagnostic tools for scientific and medical research."

Finally, the third, and most recent, startup Eriksen founded was Swift Front.

"The mission of Swift Front is to develop a fully automated high-speed microscope platform that can be used to generate three dimensional images of whole organs or other huge objects at speeds 1000 to 10,000 times faster than what's commercially available today," he said.

According to Eriksen, there are three key things every faculty who wants to start a company should think about:

1. Mind the culture gap

Scientists evaluate research by considering whether it makes an original contribution to our understanding of the world. Businesses have a different rationale, which, by and large, is to make money. This engenders a huge culture gap. Your greatest, latest discovery in the lab may have no immediate practical application, and will never be of interest to businesses, unless it has the opportunity to become commercialized. As opposed to a company with an established business model, startup companies like yours will have neither an established technology, nor an established base of customers. As a founder of a startup, your primary mission is to identify who is going to buy your technology, and why they are going to buy it. Get out of the building to discover your customers.

2. Remember there is no single path to commercialization

It's a very long road from an idea in the lab to a commercial success. There are many ways to go from the laboratory bench to the store, and commercialization is just like any business process. It's part art, and part science; part inspiration and part perspiration. There are no shortcuts to becoming successful. So, if anyone tells you at the start that your idea is a guaranteed winner (or not), don't believe them. There is a lot of hard work that has to be done to see if an idea can make it.

3. Stay self-funded as long as possible

Starting a business is one of the hardest things you'll ever do. It takes time, energy, and money… a whole lot of money. More money than you have in your bank account (probably). Does that mean you need to find an investor? No. Avoid taking investments too early in the company. Whether you head to the bank, call a rich family friend, or tap an investor, you give up control as soon as you hold out your hand for money. Retain control of your business's money, and you will keep control of your business.

Money is the Biggest Obstacle

Obstacles are inevitable when starting a new business. "Money makes the world go round, and one of the most challenging obstacles for any new company is to have enough money to keep moving forward," Eriksen said.

Eriksen said his first company, Alzeca, was "self-funded for several years." In order to move the company forward, they needed to seek non-dilutive forms of funding to develop their technology.

Types of Non-Dilutive Funding

  • Grant Awards
  • Bank loans
  • (Forgivable) Loans from Family and Friends
  • Licensing and Royalties from Products
  • Tax Credits
  • Crowdfunding

Eventually, Eriksen and his team at Alzeca were ready for human trials and needed millions of dollars to do so.

"By this point, we were fortunate that we had an excellent team of founding members, consisting of myself, Dr. Annapragada, a founder with deep business experience and a CEO who did a lot of the actual fundraising for us. Together, the team was able to recruit investors with deep pockets, allowing us to move this technology forward," Eriksen said.

Basic Checklist for Starting a Company

Beyond understanding the larger concepts behind starting a company and that money is essential, here are a few things to remember, according to Eriksen:

  1. Ask other entrepreneurs for advice
  2. Identify your target audience/customers
  3. Believe in your idea and don't let anyone tell you otherwise. Work hard and see for yourself if the idea will work
  4. Seek out what resources your university offers for entrepreneurs
  5. Avoid taking investments too early in the company. Retain control of your business's money, and you will keep control of your business.
  6. When it's time to expand, use non-dilutive types of funding
  7. Have a strong team behind you that wants to see the company succeed

What's The Big Idea?

Any aspiring entrepreneur who is considering starting a new company, but has no previous experience, should ask other entrepreneurs for advice. UH offers a number of programs that support faculty entrepreneurs such as the regional iCorps program and a growing Office of Technology Transfer and Innovation at the UH Technology Bridge. Be sure to check out your technology transfer office at your university to see what programs are available to support you as you get started.

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This article originally appeared on the University of Houston's The Big Idea. Cory Thaxton is the communications coordinator for The Division of Research.

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Building Houston

 
 

Here's your one-stop shop for innovation events in Houston this month. Photo via Getty Images

Houstonians are transitioning into a new summer month, and the city's business community is mixing in networking and conference events with family vacations and time off. Here's a rundown of what all to throw on your calendar for July when it comes to innovation-related events.

This article will be updated as more business and tech events are announced.

July 10 — Have a Nice Day Market at the Ion

Stop by for a one-of-a-kind vendor market - #HaveANiceDayHTX - taking place at the Ion, Houston's newest urban district and collaborative space that is designed to provide the city a place where entrepreneurial, corporate, and academic communities can come together. Free to attend and free parking onsite.

Have a Nice Day is a creative collective with a goal of celebrating BIPOC makers, creators, and causes.

The event is Sunday, July 10, 4 to 8 pm, at The Ion. Click here to register.

July 12 — One Houston Together Webinar Series

In the first installment of the Partnership's One Houston Together webinar series, we will discuss supplier diversity an often underutilized resource for business. What is it and why is it important? How can supplier diversity have long-term impact on your business, help strengthen your supply chain, and make a positive community impact?

The event is Tuesday, July 12, noon to 1 pm, online. Click here to register.

July 14 — Investor Speaker Series: Both Sides of the Coin

In the next installment of Greentown Labs' Investor Speaker Series, sit down with two Greentown founders and their investors as they talk about their experiences working together before, during, and after an equity investment was made in the company. Attendees will get a behind-the-scenes look at one of the most important relationships in a startup’s journey and what best practices both founders and investors can follow to keep things moving smoothly.

The event is Thursday, July 14, 1 to 2:30 pm, online. Click here to register.

July 15 — SBA Funding Fair

Mark Winchester, the Deputy District Director for the Houston District Office of the U.S. Small Business Administration, will give a short intro of the programs the mentors will discuss. There will be three government guaranteed loan mentors and two to three mentors co-mentoring with remote SBIR experts.

The event is Friday, July 15, 10:30 am to 1 pm, at The Cannon - West Houston. Click here to register.

July 16 — Bots and Bytes: Family STEAM Day

Join the Ion for a hands-on learning experience to learn about tech and robotics and gain insight into the professional skills and concepts needed to excel in a robotics or tech career. This event will be tailored for 9-14-year-olds for a fun STEM experience.

The event is Saturday, July 16, 10 am to 1 pm, at The Ion. Click here to register.

July 19 — How to Start a Startup

You have an idea...now what? Before you start looking for funding, it's important to make sure that your idea is both viable and valuable -- if it doesn't have a sound model and a market willing to pay for it, investors won't be interested anyway.

The event is Tuesday, July 19, 5:30 to 7:30 pm, at The Ion. Click here to register.

July 20 — Perfecting Your Pitch

Join the Ion for their series with DeckLaunch and Fresh Tech Solutionz as they discuss the importance and value of your pitch deck when reaching your target audience.

The event is Wednesday, July 20, 5:30 to 6:30 pm, at The Ion. Click here to register.

July 21 — Transition On Tap: Investor Readiness with Vinson & Elkins LLP

Attorneys from Greentown Labs’ Gigawatt Partner Vinson & Elkins LLP, a leading fund- and company-side advisor for clean energy financing, will present an overview of legal considerations in cleantech investing, geared especially toward early-stage companies and investors. The presentation will cover the types of investors and deals in the cleantech space and also provide background on negotiating valuation, term sheets, and preparing for diligence.

The event is Thursday, July 21, 5 to 7 pm, at Greentown Houston. Click here to register.

July 28 — The Cannon Community 2nd Annual Town Hall Event

Partner of The Cannon, Baker Tilly, has played an integral part in the success of Cannon member companies. Join the Cannon community for The Cannon's 5-year anniversary celebration!

The event is Thursday, July 28, 4 to 7 pm, at The Cannon - West Houston. Click here to register.

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