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What makes a good start-up? Why would I want to create one?
A start-up is a new company created specifically for the purpose of commercializing your technology. What makes a good start-up is a matter of opinion (and debate!), but here are some elements to consider:
- A good start-up obviously starts with good technology. Having “multiple shots on goal” is often a plus (as the first product might not work out), so having a platform technology—an underlying technology that can produce multiple products—is helpful, but not essential.
- A strong value proposition. What does the competition look like? How is our product better? Will customers be willing to pay for these advantages?
- Sensible capital needs. How much money will it take to get to market? Does the market opportunity provide a healthy return on that investment?
- Manageable risks. No start-up company is without risk—what are the key risks for your technology? When do we resolve those risks and how? How much does it cost
Some questions to consider when thinking about a start-up:
- What are we going to accomplish outside of Duke that we cannot accomplish inside of Duke? If you have the resources to push the technology forward in your lab, it may be best to do that first, rather than form a company now. That said, there are key commercial activities that are difficult (or impossible) to conduct inside a university—manufacturing, sales, expensive animal studies or clinical trials, etc. If the tasks in front of you are focused on development or commercialization rather than research suited to a university, it’s probably time to consider spinning the technology out.
- Why not license to an existing company? For many products, the ultimate commercial entity is a large company that has the sales force and manufacturing capabilities to make the product a success. If a partner like that is interested, it’s definitely worth considering rather than form a start-up. Often, university research is too early in development to appeal to a large company like Pfizer, Boston Scientific, or 3M. A start-up is a great vehicle to bridge the gap.
Need more help thinking through this?
Advice, Mentorship & Funding
- The Duke New Ventures Group is your first stop for initial evaluation of start-up potential and advice on how to move forward. We can help you plan and execute a process that will take you from IDF to a corporate formation to fundraising and beyond.
- While still inside of Duke there are myriad resources to help fund and shepherd your invention along. Starting with OTC, we have resources to assess the competitive and patent landscapes, file for protection, and explore potential licensees. Other programs inside of Duke provide mentorship and translational research funding to move things forward. Check out our list of programs here. We would be happy to sit down with you, go through the list, and make introductions to maximize your chances of success. Drop us a line!
- We are fortunate to live in the Triangle—a rich hub of entrepreneurial activity and a thriving start-up community. For starters, check out local groups focused on supporting new companies here. We would love to make introductions for you, so don’t hesitate to contact us and get time to discuss our options.
We highly recommend inventors engage corporate counsel to advise them on corporate formation, prepare corporate documents, and provide advice through the process. The best lawyers have worked with dozens of university-based spin-out companies and can provide advice on everything from licensing to fundraising. It’s up to the inventors/founders to select and pay for counsel, but if you don’t already have a corporate lawyer, talk to us and we’d be happy to make introductions. Check out our Mentors-in-Residence Program
Inventors' Role in a Start-up
- Starting a company takes significant time and effort. Before the start-up is ready to launch, the inventor(s) will need to serve as champions for the project—talking to investors and potential team members, organizing the key components of the research for transition, and helping put together materials to market the technology. Contact us and we can talk through the details.
- Once formed, most faculty inventors don’t choose to leave Duke to join the start-up full time (it’s Duke- being a professor is great here!). That said, there are still opportunities to consult and advise the company in an official capacity once it’s up and running.
- Graduate students and post-docs can make excellent technical and scientific management for a company. Having the continuity between the Duke lab and the start-up company is a definite leg up and a vote of confidence from someone close to the invention. Trainees are not typically the only management necessary to attract funding and move things forward, but their involvement can be a great contributor to success.
Spin-out Company Deal Structure
As with almost all deals around university technology, the agreement with a start-up is structured as a license to the underlying intellectual property. These deals typically have the same financial components: up-front license fee, milestone payments, royalties, IP costs, and annual license fees. Understanding that new companies are often cash-poor, we typically structure the deals where the up-front fees are in the form of equity in the company. Get time with us and we can take you through the process in more detail. Get time with us
Resources for Start-ups
Please refer to our full list of Resources available to you. Start-up Resources