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 BATB 18 FEBRUARY 2011 MIKE PROVANCE OLD DOMINION UNIVERSITY [email protected]
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"Class 5" Entrepreneurship -- Strategies for Starting and Growing New Life Science Ventures in Today\'s TurbulenceStarting 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)
Transcript of Class 5 Entrepreneurship in Life Sciences
"CLASS 5" ENTREPRENEURSHIP!STRATEGIES FOR STARTING AND GROWING NEW LIFE SCIENCE VENTURES IN TODAY'S TURBULENCE
BATB 18 FEBRUARY 2011
MIKE PROVANCE OLD DOMINION UNIVERSITY
2011-?, A CLASS 5 CLIMATE!
WHAT SHOULD LIFE SCIENCE ENTREPRENEURS DO?!
HOW CAN THE REST OF US HELP?
“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
CLASS 5 CLIMATE
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
© Duke University 2008.
CLASS 5 CLIMATE
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
CLASS 5 CLIMATE
Labor pains Paradox in Life Science labor market
Labor-intensive, intellectual capital "dependent
Growth in employee levels
Future strains on labor force
The real problem isn’t money;"it’s management
Source: Battelle, `2010.
Source: Battelle, `2010.
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
WHY CLASS 5? !
WHAT SHOULD LIFE SCIENCE ENTREPRENEURS DO?!
HOW CAN THE REST OF US HELP?
WHAT SHOULD LIFE SCIENCE ENTREPRENEURS 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
WHAT SHOULD LIFE SCIENCE ENTREPRENEURS 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.
WHAT SHOULD LIFE SCIENCE ENTREPRENEURS DO?
Connect, connect, connect
A few partners yields higher chance of survival
Networks offer flexibility
Focus on outcomes
Stakeholder perspective
WHAT SHOULD LIFE SCIENCE ENTREPRENEURS DO?
Increase capital efficiency
More productivity with fewer resources
Leverage relationships with technological and market partners
Develop and implement an Agile methodology for growth
WHY CLASS 5? !
WHAT SHOULD LIFE SCIENCE ENTREPRENEURS DO?!
HOW CAN THE REST OF US HELP?
LEVERAGE THE ECOSYSTEM
The challenges affecting LS new ventures are amplified in regions that lack a critical mass of life science industry
Diverse knowledge flow
Institutional gravity
Social capital
Search v. agglomeration
LEVERAGE THE ECOSYSTEM
FINANCING 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.
LEVERAGE THE ECOSYSTEM
How can VA – and Hampton Roads - encourage the growth of Life Science new ventures over this turbulent 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
CONCLUSIONS
