Class 5 Entrepreneurship in Life Sciences

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"Class 5" Entrepreneurship -- Strategies for Starting and Growing New Life Science Ventures in Today\'s Turbulence

Starting a new life science venture is challenging under any conditions. Today, the state of financing, increasing complexity and uncertainty in the regulatory environment, and globalization forces in the industry conspire against entrepreneurs. These conditions demand a return to fundamentals when building businesses, but also a renewed focus on new strategies that prepare these ventures for a competitive environment in the next decade that is decidedly different from the last ones. This presentation explores the Class 5 whitewater conditions of biotech today, and propose approaches entrepreneurs can employ in order to succeed in these conditions.

(This presentation was made at Biotech at the Beach, a conference series in Virginia Beach VA, on 18 February 2011)

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Class 5 Entrepreneurship in Life Sciences

  1. 1. "CLASS 5" ENTREPRENEURSHIP!STRATEGIES FOR STARTING ANDGROWING NEW LIFE SCIENCE VENTURESIN TODAYS TURBULENCEBATB  18 FEBRUARY 2011MIKE PROVANCEOLD DOMINION UNIVERSITYMPROVANC@ODU.EDU
  2. 2. 2011-?, A CLASS 5 CLIMATE!WHAT SHOULD LIFE SCIENCEENTREPRENEURS DO?!HOW CAN THE REST OF US HELP?
  3. 3. “CLASS 5” ENTREPRENEURSHIP “Extremely long, obstructed, or very violent rapids ... Drops may contain large, unavoidable waves and holes or steep, congested chutes with complex, demanding routes. Rapids may continue for long distances between pools ... What eddies exist may be small, turbulent, or difficult to reach.” - americanwhitewater.org
  4. 4. CLASS 5 CLIMATE © Duke University 2008. How is Life Sciences sector changing?   Increasing complexity in industry structure   Consolidation on large firm end   Extinction of the ‘blockbuster’   Labor pains   Capital constraints on the new venture end
  5. 5. CLASS 5 CLIMATE
  6. 6. CLASS 5 CLIMATE Extinction of the ‘blockbuster’ Wave of drugs coming off patent from 2011-2014   23 drugs, ~$80 Billion Big pharma shift to biotech projects Industry moving towards personalized medicine
  7. 7. CLASS 5 CLIMATELabor pains Paradox in Life Science labor market   Labor-intensive, intellectual capital " dependent   Growth in employee levels   Future strains on labor force Source: Battelle, `2010.   The real problem isn’t money;" it’s management Source: Battelle, `2010.
  8. 8. CLASS 5 CLIMATE Venture capital constraints Year-over-year declines for past 2-3 years   2011 showing slight uptick, but… Investments growing more " conservative   later stage and performance" based Worst is yet to come for VC " industry   Waterfall of losses coming " 2011-2014   Finding a new model
  9. 9. WHY CLASS 5?!WHAT SHOULD LIFE SCIENCEENTREPRENEURS DO?!HOW CAN THE REST OF US HELP?
  10. 10. WHAT SHOULD LIFE SCIENCEENTREPRENEURS DO? Pivot to new ideas, markets   Decade of adaptation   Observe, orient, decide, act Focus on revenue-positive business models sooner Intensive strategic alliances with a select few Increase capital efficiency
  11. 11. WHAT SHOULD LIFE SCIENCEENTREPRENEURS DO?Revenue-positive business model CONVENTIONAL WISDOM   Demonstrating the quality of technology is most important to gain legitimacy within the industry and financial markets REALITY   The technology must be solid, but successful entrepreneurs demonstrate quality of their management and ability to produce cashflow first.
  12. 12. WHAT SHOULD LIFE SCIENCEENTREPRENEURS DO? Connect, connect, connect A few partners yields higher chance of survival Networks offer flexibility Focus on outcomes Stakeholder perspective
  13. 13. WHAT SHOULD LIFE SCIENCEENTREPRENEURS DO?Increase capital efficiency More productivity with fewer resources Leverage relationships with technological and market partners Develop and implement an Agile methodology for growth
  14. 14. WHY CLASS 5?!WHAT SHOULD LIFE SCIENCEENTREPRENEURS DO?!HOW CAN THE REST OF US HELP?
  15. 15. LEVERAGE THE ECOSYSTEMThe challenges affectingLS new ventures areamplified in regions thatlack a critical mass oflife science industry Diverse knowledge flow Institutional gravity Social capital Search v. agglomeration
  16. 16. LEVERAGE THE ECOSYSTEMFINANCING GROWTH IN THE ‘NEW’ VC ERA Money will follow the people who have the most promising ideas with greatest commercial potential. This means connecting the region into the inner workings of an international industry in order to attract promising talent and select promising ideas.
  17. 17. LEVERAGE THE ECOSYSTEMHow can VA – and Hampton Roads - encouragethe growth of Life Science new ventures over thisturbulent era? Education and employment policies   Distribution of employment favors Virginia (although capital investment not an advantage) Marketing changes to tax policy   Virginia Innovation Investment Act of 2010<$3MM technology business primarily operating in VA -- tax deduction for angel investors on long-term capital gains Direct investment in the early stages of formation   Technology development   Workforce training Improve access to university technology   Make it easier to license technology   Focus on spinning off technology in start-up environments New model for incubation   Focus on talent; focus on screening for most promising ideas across nation Shift attention to comparison with rest of the nation, world
  18. 18. CONCLUSIONS

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