Valuation of life sciences companies has been battered and the IPO window has closed, for now.
But there are still plenty of strategic partners looking for promising new technology and life sciences companies to fill their pipelines. If you want to be one of them, having the right team put together will increase that likelihood.
In my long experience advising life sciences and technology startups, it's rare that a single initial innovator, despite his or her passion and competence, has everything that it takes—in skill, experience, AND time—to bring a technology project to a viable endpoint. As a result, they risk not only frustration and burnout, but also sometimes losing out on deals with risk-averse investors.
Having the right team at your side is critical to getting the investment you need to take your idea from concept to viable product. As your project moves beyond the scientific concept phase, your venture will likely need experts in various areas. That includes finance, operations, manufacturing, marketing, sales and other areas depending on how you plan to grow the company.
Importantly, you'll need people with business savvy who can look at the project from an investor's perspective and instill confidence that your enterprise has what it takes to navigate the treacherous pathway from innovation to exit.
Here are some considerations to keep in mind as you build that team.
Get Your Startup Team Onboard Early
Many times, an enthusiastic inventor is so focused on the technology and getting to a proof of concept that he or she overlooks the foundational elements—like marketing, finance and human resources, among others—of structuring and growing the business. Likewise, they often have a misplaced belief that the utility of their invention is self-evident and that the product or service should sell itself.
But underestimating the importance of building out a capable and complementary team can stunt the growth of the company for several reasons.
Business and Financial Savvy—It's not uncommon, and in fact should mostly be expected, for a startup's core product or service to morph into something quite different over time in response to marketplace queues. But inventors and technologists often lack the experience to recognize the market signals that foretell a dead end for their ideas as initially imagined or the need to pivot their focus. Similarly, although an inventor deeply steeped in the technology may be a fabulous spokesperson for the technology, the inventor may be much less adept at understanding and communicating the financial aspects of the business.
And it's frequently the financial aspects of the business that will attract and keep investors interested.
Blind Spots and Redundancy—Investors want to know that a startup's success or failure doesn't hinge on the continued participation of one or two key founders or employees. It's the proverbial “what if someone gets hit by a bus scenario.” You need a well-rounded team with built-in redundancies to earn the trust of potential inventors.
In addition, it's important to have other people with complementary knowledge and talents to hedge against the risk of the technologist/founder's blind spots. A good example of this is biotech labeling. How you test a product greatly influences how you can later label, market and promote that product. So it's important to get someone familiar with regulatory and clinical testing issues on your team very early.
Leadership—One of the most important, but often overlooked issues that is critical to any startup's success is having strong leadership. Many obstacles occur in the process of taking an innovation from garage to marketplace. You need to have someone on your team who is skilled at keeping the team motivated and excited about the project when those obstacles occur.
Sometimes the inventor will have what it takes in this respect. But in my experience, this role is best suited to someone who is not so deeply steeped in the technology and who can bring well-honed people skills to bear in establishing a collective and collaborative environment for the team.
Your Most Important Early Team Members
Among all of the many team roles that your startup will grow into over time, it's critically important, especially for a life sciences and technology startup, to get these two in place as early as possible.
Business Expert—When you start to approach investors, they will want to know that your business has a well-thought-out business plan that gives them some assurances that their money is well-placed. You need someone with business experience who can think both tactically and strategically in creating this plan.
Likewise, a business plan is a living and breathing document that must change in response to external factors. You need a business expert on your team who can understand and communicate day-to-day projections, including budgeting, cash projections and reporting to understand where the team needs to focus and if that focus needs to shift.
Regulatory and Clinical Trial Experts—For life sciences startups, it's particularly important to get advice early on from a Food and Drug Administration (FDA) or European Medicines Agency (EMA) regulatory expert. Many times innovators without regulatory experience and understanding miss the point that the provable thesis from the clinical trials is what drives the labeling and, ultimately, the product's marketability.
It's important early on to have an expert in this space to help you understand what risk tolerance the agencies may have, how to properly position your innovation to get through the regulatory process, and ultimately ensure that your end product is as marketable as possible.
Finding the Right Talent for Your Startup Team
In our increasingly remote working environment, there are many opportunities for a company to bring on the targeted expertise they need to bridge specific gaps in their team's skill sets. There are many options to bring on board part-time remote contractors and fractional employees. And it need not be cost-prohibitive either. A realistic compensation package usually involves equity or stock options, which is helpful for a cash-strapped young startup.
In many cases, a strong advisory board can also help get the company moving in the right direction even before it can afford to bring on part-time or full-time employees in certain areas. Advisory board members can also help attract others who are willing to lend their expertise and advice to the company, usually in exchange for a small amount of stock.
When you're ready to build out your team, it's helpful to talk to friends and colleagues who have traveled down this pathway before or others who have indicated an interest in helping young companies succeed. If you're at an institution, you might even have a technology accelerator or business school colleagues who can also weigh in. It's particularly important to receive references and referrals in this respect. A well-oiled startup team requires most everyone to have a great deal of emotional intelligence to be able to work together in a truly complimentary fashion.
It's also particularly important that the people you bring on to your team have the right attitude. As I like to explain to most of my clients, every team member brings two basic things to your team—skills and attitude. And while the first can be taught, the second usually can't. Taking a product from lab to bedside is fraught with endless setbacks, problems, and other points of stress. People with corrosive attitudes will ultimately detract from the productivity of the team and negatively affect its dynamics. If you end up with someone like this on your startup's roster, it's important to separate from them swiftly, even if they're contributors to the technology. It's a very difficult decision to make and can be a temporary setback, but it's a must if you want your startup to ultimately flourish.
Leading and Inspiring Your Startup Team
Along with bringing the RIGHT people on board, I can't stress enough the importance of keeping your team inspired and motivated. It certainly is every startup's goal to eventually make a handsome profit. But the shimmer on the initial promise that your startup will be the next unicorn will eventually fade. And when your people are eating cold pizza at 5 a.m. after working yet again throughout the night, they're going to need a lot more than far-off promises of yet-to-be-had riches to keep them going.
Good leaders understand the importance of forwarding a company narrative that gives people meaning and purpose to their work. The things that your team is striving to accomplish may have the potential to save thousands of lives or drastically improve their quality of life. This type of work is very much worth the effort. But the venture's leadership must continually articulate this mission and its importance to keep the team motivated and on track, along with instilling a culture of excellence and cooperation toward common goals.
At Crowley Law, we understand these challenges and have helped many entrepreneurs through these challenges and have seen many more – some successful and some not so successful. This give us a unique perspective on the product development process that we can bring to bear. Call us (844-256-5891) for a complimentary consultation if you're considering or involved in a life sciences or other technology development. We're here to help.