“There are great ideas and there are ideas that will sell and they are not always the same thing,” said Thomas McWilliams of Drinker, Biddle & Reath. He spoke at Princeton University’s Keller Center Technology Commercialization Panel, chaired by Ed Zschau, on Tuesday, February 16, at 5:30 p.m. (From left: Ed Zschau, Shahram Hejazi, Katherine O’Neill, Thomas McWilliams, Laurie Tzodikov.)
Shahram Hejazi, venture partner of BioAdvance and former CEO of Zargis Medical Corporation, had a similar warning: Is the business idea merely a solution that is looking for a problem? Even if you do what you say you can do, does anybody care?
The business idea must be able to make three times the required investment, said Hejazi. If you need $100 million to prepare for the company’s sale, can it sell for $300 million, and can you show any company in this space that will sell for that?
But angel investors have realistic expectations, said Katherine O’Neill, executive director, Jumpstart NJ Angel Network. When they put their money in pre-revenue companies, they expect revenue from just one out of 10 companies. Three may live, six will die.
What type of company attracts investors? They look for innovative patent technology, solutions to real problems, a low level of initial capital to bring the business to fruition, and an enthusiastic representative (which could be a graduate student) who can communicate the value of the technology.
Angels also look for a technology in which they have expertise. They don’t want to contribute just money; they want to add value to the firm.
All of this information applies to any young company but taking university inventions to market has its own problems, she said. Academic inventors get distracted by their other responsibilities. “An amazing number of academic scientists don’t return calls from potential investors,” said O’Neill. She pleaded with professorial entrepreneurs. “If you’re busy and don’t have time to meet, at least return the call and say so.”
Vivek Pai, associate professor of computer science, experienced the conflict between his entrepreneurial and academic pursuits. He helped architect and develop iMimic Networking, the fastest Web proxy service in the world. It was bought out by a company that was bought out by Cisco, then he cofounded CoBlitz, a content distribution firm.
Pai said that if he hadn’t needed to concentrate on getting tenure, his company might have gained better market share. “Be prepared for your new company to consume all your free time. If you aren’t willing to spend that time, then license your technology. “
Laurie Tzodikov told how the Princeton University office of Technology Licensing and Intellectual Property works closely with professors and graduate students to commercialize their ideas. Each year the office gets 80 to 100 invention disclosures, files 60 provisional patents, makes 15 to 20 agreements per year, and helps two to three startups per year.
Some examples: Alympta, the Eli Lilly cancer drug; protection equipment from TigerOptics; Universial Display Laboratory, mice models sold through Taconic Artemis.
“We need a partnership with the inventor. We need to be very persistent,” she said.
But by far the most surprising observation came from McWilliams. In the USA Inventors have just one year to file a patent after they first publish their research. Elsewhere in the world, it’s a much shorter fuse, and for China you need to get the patent almost before you publish.
Amazingly, what constitutes “publishing” can be just giving a slide presentation, or giving any kind of presentation where someone has the opportunity to take notes. That’s a strong warning to keep your mouth shut until you have hired a lawyer.
Future events: a Keller Center entrepreneurs’ panel on Friday, February 26, at 2 p.m.
And the New Jersey Entrepreneurial Forum hosts a seminar on intellectual property, effective low-cost protections and portfolio strategies, with Elliott Stein of Stevens + Lee and David Gange of Chemistry Patent Search, on Thursday, March 11, at 4 p.m. at the Technology Center of New Jersey.