Independent Science: Beyond Academia and Industry

17. September 2013

Miriam Boer

When I finished my Ph.D. in biochemistry at the University of Maryland in 2011, I graduated into one of the toughest biotech job markets in history. I applied for over 200 traditional positions within academia and industry, with no luck. As my search stalled, I turned to a pet interest I had had in low-intensity ultrasound and built a business plan around using it as a novel melanoma treatment.

I didn’t realize it right away, but my startup took me into the world of independent science, where the goal is doing your work on your terms—right now. While the science job market is tighter than ever, lab spaces are actually becoming more affordable, particularly if you are willing to work in a communal setting. From how it’s funded to the workplaces associated with it, independent science deviates from conventional expectations of scientific research. My nontraditional startup, Sonify Biosciences, LLC, is one of many that exist outside the confines of academia, big industry and government jobs.
 
Who’s involved?
The people who consider themselves independent scientists range from hobbyists without college degrees to those with postdoctoral or even professorial experience. The network is larger than just the individuals or small groups who spearhead them. For instance, my specialty lies in biochemical wet-lab work, so I contract out the engineering and physics to people whose skills and knowledge exceed mine. They’re not technically employees, but they’re vital to Sonify’s success.
 
How do you fund this?
The quick answer is any way you can. The long answer is that, because the endgame is getting to do your own work, independent scientists can be funded by one or more of the following: private investment, grants, Small Business Innovation Research money, crowdsourcing, loans, angel investment, or even their own savings. Each has pros and cons. For me, my first success was winning the Recent Alum and Best Biotech categories of the University of Maryland 2012 business plan competition. The bottom line is that you have to understand your individual situation. There’s no right way to do this, but that means there’s no wrong way either.
 
Where do you work?
I refer to Sonify Biosciences as a “gypsy” startup because I don’t have permanent lab space. I’m renting space in a shared services lab in a local teaching hospital. By contrast, building a biological research facility from scratch would run hundreds of thousands of dollars. Keeping overhead low enabled me to start at what’s referred to as stage zero—the point where you’re doing proof-of-concept research without an intellectual property portfolio (meaning you hold no patents). It’s nearly impossible to get stage zero investment, because there’s nothing in it for the investor. However, by keeping my total costs below even the value of most grants, I made the gamble worthwhile to my investors.
 
Shared workspaces already exist in many cities. These so-called high-tech “hackerspaces” are becoming more common, with even large industrial entities investing in the promise of the independent research model. For example, Janssen Labs set up a shared biological research facility on Johnson & Johnson’s R&D campus in La Jolla, and one is opening in Boston as well. Johns Hopkins University in Baltimore is developing a shared space for independent engineering efforts. Even if you don’t live in a startup hub, you can still find workspace if you get creative.
 
Should I get involved?
You have to know yourself. I enjoy the unstructured approach, and being able to work on my own ideas before I’m 30 took precedence over working towards a guaranteed lifelong job. Ultimately, you must figure out the right vehicle to do work that generates value, however you define it. For me, it’s a nontraditional startup. For you, it might be something completely different. You can start by figuring out what ideas and possibilities excite you, both as a person and a scientist.
 
Miriam Boer (mboer@sonifybio.com) is the founder and CTO of Sonify Biosciences LLC in Baltimore, Md., U.S.A. She tweets @mademoiselleMim and blogs at http://independentscience.tumblr.com/.

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Are You an Entrepreneur?

25. September 2012

Lisa Balbes

This post was adapted from content on the Career blog of the American Chemical Society (ACS) with the kind permission of ACS and the author.

Recently, I encountered several graduate students who were considering starting their own businesses. While many people dream about being an entrepreneur, a significantly smaller number are willing to put in the time and effort it takes to make their dream a reality. A colleague who has been running his own company for over 20 years said that, when people ask for his advice on starting a business, he tries to talk them out of it to gauge how dedicated they are to the idea. When he started his own business, he noted that “the only thing that would have stopped me from doing it was if my wife had told me no!”

If you have that kind of dedication, you just might be an entrepreneur.

Starting point
A great place to begin is by writing a business plan—a document in which you completely describe the business. Forcing yourself to write it down will make you step back and really plan out the venture. The living document then serves as a roadmap as you move forward and start to involve other people. 

Summary
One of the first sections of the business plan will be the executive summary. You should be able to describe your business in several different levels of detail. Are you going to sell a product or a service? What is your targeted industry? What will make your offerings compelling to potential customers?

Legal structure
Will you start a sole proprietorship, partnership, limited liability company, C or S corporation? The form you select will have implications for taxes, liability, staffing and complexity. Make sure you understand all the options and implications, and choose what’s right for you. 

Products and services
While you may have an idea of what you’re going to sell, in a written business plan you’ll have to detail your offerings. How many different products/versions will you have to offer in the beginning? How is your offering going to be different/better from other things already on the market? Will you offer customization? How will you protect your intellectual property? Will you patent your ideas, or keep them trade secrets?

Market analysis
Describe the industry in which you will be working, including historical, current, and projected future size. What subsection constitutes your target market? What is the critical problem your offering is going to solve? What alternatives are they currently using?  What are their geographic and demographic characteristics? Who is your ideal customer? Are there any seasonal or cyclical purchasing patterns you’ll have to work around? What market share do you expect, and why?

Marketing plan
Once you have your product and target market, you have to get the two together. What is your marketing plan? How are those ideal customers going to find out about your offering? Will you exhibit at trade shows or conferences? Offer free trials?

Competitive intelligence
Who exactly is your competition? It could be other companies—or possibly even your own potential customers if they have the capability to devise internal solutions to the problem you aim to address? What are the strengths, weaknesses and market share of each? How important is this market to your competitors? What are barriers to entry to this market? What other offerings will present to differentiate you from the pack? What is on the horizon from other companies?

Organization and management
Who is going to run the company? What is their expertise and experience? If you are plan to hire employees, you become responsible for bringing in enough business to cover their salary, and taxes, while reporting requirements get more complicated. Depending on the number of employees you have and the state in which you are operating, various other regulations start to apply as headcount numbers increase. How will you address the various regulatory requirements?

Pricing
How much is it really going to cost to make your product or service, and how will you price it? Are you going to compete on low cost and high volume? Or high cost and high quality? Is your offering a need or a want for your customers, and will that affect what they are willing to pay?

Revenue
Will you reply on repeat customers, subscriptions, or contracts? Will you sell over the Internet or are face-to-face sales required? Will you hire your own sales force, or use distributers? Where will start-up money come from? How will you ensure enough money to cover operating expenses until substantial profits arrive? Will you seek investors? If so, how will you attract them and what will you offer them?

There are many more questions your business plan will have to answer, but if you’ve already thought about all these issues, congratulations! You are well on the way to becoming an entrepreneur. If not, you now know how to get started. For more resources, see the US Small Business Administration or SCORE for more ideas, and the new ACS Entrepreneurship Initiative (EI).

This article was written by Lisa M. Balbes (lisa@balbes.com) of Balbes Consultants LLC. Lisa is a technical writer/editor and author of Nontraditional Careers for Chemists, published by Oxford University Press.

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ONE Event, Three Perspectives on Optics Startups

24. October 2011

By Christina Folz

At last week’s Frontiers in Optics meeting, I attended the first meeting of OSA’s Network of Entrepreneurs (ONE), a new group intended to connect optics students and young professionals with mentors who are scientist-entrepreneurs.

This post shares advice that was given at the event on how to jump into the startup world. The speakers included Greg Quarles, president and chief operating officer of B.E. Meyers; Michelle Holoubek, director in the electronics group at the intellectual property law firm Sterne, Kessler, Goldstein & Fox; and Tom Baer, executive director of the Stanford Photonics Research Center at Stanford University, cofounder of Arcturus Bioscience Inc. and 2009 OSA President.

Like a startup, ONE is still in development. Its organizers, including Bright Futures bloggers Brooke Hester and Danny Rogers along with Armand Niederberger of Stanford, are seeking volunteers to grow the program. Please contact Brooke, Danny or Armand if you are interested in joining this new community.

Greg Quarles: How to Act Like an Entrepreneur

Have clarity. Know why you do what you do. Successful entrepreneurs have a purpose, cause or belief that exists above and beyond the products or services they sell.

Have discipline. You must understand not only what product or service you plan to offer but how you intend to do it. Business owners cannot simply demand that their team “make it so,” in the fashion of Captain Jean Luc Picard on Star Trek. They must hold themselves and their teams accountable to a defined set of guiding principles or values.

Be consistent. Everything you do and say must prove what you believe. In this sense, YOU are the product—a critical part of your own brand. The product should reflect your core values, and you should adopt a winning attitude in all areas of developing your business. If you don’t believe in what you’re doing, how can others?

Michelle Holoubeck: Why Intellectual Property Matters
Intellectual property (IP) includes trade secrets, patents, copyrights and trademarks. Every fledgling entrepreneur should learn the fundamentals of IP to protect their growing business because it enables you to:

Guard your ideas and establish a competitive edge. IP is the only way that small companies can contend with larger ones on an otherwise skewed playing field. For example, when Microsoft was shown to have used XML technology that was patented by the small company i4i in one of its product releases, the software giant was ordered to pay i4i to the tune of several hundred million dollars.

Promote investments. Because funders want to protect their investments, they are unlikely to finance startups that have not developed IP safeguards.

Encourage disclosure of new ideas. Sharing exactly how a company’s products or processes work in a patent helps to drive further innovation in the marketplace, and it enables businesses and consumers to easily distinguish among different products and services.

Also keep in mind:
• Publically disclosing your invention—by describing it at a conference, for example—before filing a patent application may limit your ability to protect your invention.

• If you disclose some of your invention, you must disclose it all. You can’t keep the best components a secret.

• You don’t have to actually make an invention to patent it; you just have to describe how you would make it.

• Not everyone who works on a product is an inventor. Incorrectly attributing inventorship to someone who did not play a real role can damage your patent.

Tom Baer: Know your Market First
Contrary to popular belief, a product idea is not required to start a successful company. Here’s the process that worked for Tom:

Identify a market. A couple years ago, Tom worked with a team to develop the Stanford spinoff Auxogyn—without a specific product idea in mind. Instead, the team started by targeting the area of assisted reproduction, a market that is growing by about 20 percent per year, with about 1 in 6 couples facing infertility.

Look for people who can build your company. For Auxogyn, this included a diverse group of medical doctors, developmental biologists, engineers, imaging experts and others. Look for those with the skills you lack.

Study the market. Talk with customers and assess other businesses in your niche. How do they work? What will give your company a differentiable edge?

Find and develop your idea. As you do your homework, your idea will emerge. Once it does, create product models to show your customers and incorporate their feedback into the next version. For its product, Auxogyn ultimately decided on imaging platforms that monitor the developmental process of embryos in an incubator—allowing for the selection of the healthiest ones for in vitro fertilization.

Delay financing as long as possible. Once you have the right ideas and the right market, you can find investors. If you fail, it’s better to fail early—before you’ve invested significant time and funding into product development and pilot production.

Christina Folz (cfolz@osa.org) is OPN’s editor and content director.

 

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A Guide to Structures for your Small Business

4. November 2010

By Bill Greener 

Thinking about a start-up? More and more enterprising scientists are applying their knowledge of technology and industry to their own new businesses. What does it take to shape one’s vision into a sustainable business? A solid business plan is obviously important. However, even before that, you must figure out which type of business entity will best suit your needs. This decision will affect everything from the amount of taxes and paperwork you’ll face to your personal liability to the bottom line. Here are the major options you have, along with their advantages and drawbacks.

Sole proprietorship: Someone who owns an unincorporated business by himself or herself. The main advantage is ease of formation. To get started, you need only perform a simple filing with a County Clerk’s office.  The tax implications and reporting requirements are straightforward, involving taxation at individual tax rates and standard IRS Schedule C filing. There is no separate entity tax. 

However, as your own boss, you are the sole risk manager and the profit/loss center—for better or worse. Your liability is unlimited, but you may have restricted sources of capital and funding.

General partnership: An association of two or more people who co-own a business for profit. These partnerships are generally easy to form at the state and county levels. Partners agree how to share profits and losses, which flow through the partnership to each partner’s individual tax return via a form K-1. General partnerships are typically not subject to federal or state business entity taxes. The general partners, however, are jointly liable for the obligations of the entity.

Limited partnership: One or more limited partners and at least one general one. Limited partners cannot be active in the business management; if they are, they risk losing their “limited” status.

Limited and general partnerships are similar in areas of taxation and what is referred to as “special allocation of income and loss.” Government fees for partnership formation may be higher for a limited partnership than for a general one, however. State regulations may require notices about the partnership formation to be published.

C-Corporations are your large business “Inc’s.” Corporate business entities provide greater segregation between their owners and the entity itself than is provided for in partnership arrangements.

Taxation issues are comprehensively addressed by the IRS, under subchapter “C” of the Internal Revenue Code. C Corporations require corporate officers and directors whose identities must periodically be reported to the state.

On the plus side, a C Corporation is taxed for income purposes as a separate corporate entity at both the federal and state levels. In addition, the number and types of shareholders are unrestricted. Shareholders have limited financial liability even if they participate in corporate management; rather, the corporate entity becomes the liable party. In a C Corporation, the retained corporate earnings can be kept in the business.

On the other hand, C Corporations are subject to double taxation; corporate income is taxed at the corporate level, while dividends are taxed at the individual (shareholder) level. The formal requirements of a C Corporation include government formation fees, significant record- and book-keeping, shareholder meetings and corporate elections, the issuance of stock certificates, and the sale of stock for raising capital.  Financial losses are only deductible at the corporate level.

S Corporation: A small business entity that makes a valid election with the IRS to be taxed differently than a C Corporation. S Corporations generally pay no corporate income taxes on their profits. Instead, shareholders pay income taxes on their proportionate shares of the corporate profits. Thus, an S Corporation is considered a pass-through entity similar to a partnership, but shareholders enjoy the limited liability of a corporate structure.

Among the limitations: These entities must be domestic corporations organized under state law, and shareholders are limited to fewer than 100 and to certain entities such as individuals, estates and trusts. All individual shareholders must be citizens or residents of the United States. Unlike a C Corporation, an S Corporation cannot have retained earnings.

Limited liability companies, or LLCs, are formed by filing Articles of Organization with a state’s secretary of state. The IRS taxes LLCs as if they were partnership entities.  There are no restrictions on the number or types of owners or the extent of owner participation in management. An LLC will be dissolved when certain events occur; for example, bankruptcy, the death of a member, or the incapacity or withdrawal of any member unless otherwise voted upon. Annual filing fees are required.

Bill Greener is a U.S. registered patent attorney who practices in Ithaca, N.Y. and is a partner in the firm of Bond, Schoeneck & King, PLLC. This blog post is based on an article that appeared in the May 2007 issue of Optics & Photonics News.

 

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