5 Three Science based Start-ups Narratives
5.4 Avicore (―B‖, a Microbiologist)
Interviewees’ background:
B was a master student of biological technology and had prior to participating heard about other Copenhagen University LIFE students participating in Venture Cup, who had enjoyed it.
The start-up team was formed after participating in an extra weekend workshop course in entrepreneurship conducted by LIFE. B initial motivation to join the course was that it would give him some needed ETCS points quickly. The teams were formed by random, except for the members‘ disciplines which had been selected by the organizers to complement each other.
―It was a collaboration between Novozymes and Haldor Topsøe, and they had put up some problems that we had to solve. That is where I met the rest of the group.‖
How the mentioned science based start-up entered the Venture Cup competition:
After the LIFE workshop, the group already had the initial ―idea paper‖ to partici-pate in the ―Idea competition‖ conducted in January 2010 by Venture Cup. Here the group could pitch their idea to a jury, and it received encouraging feed-back despite not winning its category competition. After this the team had a meeting where a part of the group decided to pursue a Venture Cup Competition final with the innovation.
Brief description of innovation.
In the LIFE Workshop, a possible gene modification of a yeast cell was theorized to be able to produce a more complex alcanoid, capturing more energy, than the classi-cal bio-ethanol based fuels.
After the Idea-competition and after new members were added to the group, the properties of the alcanoid-fuel produced by the GM yeast was specified to be ideally tailored to use in existing Jet-motors. Thus the start-up name Avi(ation)core(cell).
Writing the BP tailored to Venture Cup competition
Different members of the team participated in several one-day pitch-workshops,
―speed-dating‖ and lectures with potential investors, and a lifescience specific Intel-lectual Property course held by the Copenhagen University incubator Katapult, be-fore three members had a three day intense BP writing session that was concluded by submitting the BP to the Venture Cup Competition.
Simultaneously with the three day BP writing, two of the biotechnologist where par-ticipating in ―Green Lights‖. This is an invitational clean-tech conference held in San Francisco with the aim of connecting start-ups with potential investors. Both seed-funds, capital funds and large corporations participate.
B was in the San Francisco group, but had made the initial budgets and cost esti-mates that Avicore‘s BP cash-flow was based on.
―When it came to ROI, our strategy was to showcase a group of potential buyers of the patents and the company, and, by indicating their re-confirmed interest in the product the team could point toward potential competition between buyers driving the exit-price up‖.
The team also explored alternative partners outside the traditional biotech industry that saw an advantage in product synergy with their existing distribution channels.
By thinking globally about the potential customers of the start-up, the team was in tentative talks with several Fortune 500 companies who have expenditures on R&D far larger than the two Danish enzyme producers who were initially interested and introduced through Venture Cup.
Most relevant feedback encountered in the process of developing the Business Model:
―We learned quite a lot from talking to Business people who don‘t know anything about Microbiology… They ask different questions, logistics, distribution‖
If you Compare the Jury in Venture Cup with the (investment and ven-ture capitalist) people in San Francisco, were there differences in what they asked about?
The ones in Denmark were more critical. In the States it was more informal. The investors clearly could ask more questions later. No one in the San Francisco asked about Avicore‘s BP.
Did you get anything out of the IP course?
―Yes, now the new biotech students even have it as part of their first year, but we hadn‘t had any before. You read it [Patent applications] in a completely different way than articles. I still don‘ think I could write anything like that [a patent]. Here you can go for help. The IP course was really helpful‖
Insights you can use after writing a BP and pitching your invention:
―You learn something about sales pitches…But maybe a lot of the workshops were directed at smaller start-ups‖ (10.36)
One key part of Avicore‘s BP, which was not discussed during workshops, was the value capturing of IP along with the process of reaching proof-of-concept. This may be because the most vocal of the Venture Cup partners and jury members generally are specialized in soft-ware and web industries, which have low tangible assess and a very different cost structure than Biotech.
―The best thing was that we got input from people with completely different back-grounds. You see things from more points of view‖
What was the big difference between Avicore and the other start-ups in your opinion?
―Well, there was a guy that had developed a timeline for Facebook or social activity view - this will not change the world, but it is cheaper than developing Avicore. So if he makes 100.000 or ten million then that would be enough for his start-up to be successful…Our products market is so enormous that a few zeroes wouldn‘t make a difference.‖
Most relevant feedback for pursuing entrepreneurship encountered in the process of Venture Cup:
“Thinking about where you are getting your money from.‖ After participating in Venture Cup Partner companies have become more attractive as funding sources
―I did not know anything about Venture capitalists before this‖ (24.00)But the pitching taught him that venture capitalists work with to short time lines to be of interest.
In the final, several jury members commented and applauded the realism of our BP's financial model. That is interesting, since it is comprised of a ―cost budget‖ with a burn-rate ultimately of 20 million $. It was, however, seen as portraying realistic
―posts‖ and ―stages‖ of the normal development process of biotech R&D.
Also when the team moved from ethanol to jet-fuel it was due to market feedback.
―It‘s better to have a small part of a big cake than a big part of a nothing‖
Why not continue Avicore?
Now the team also could see the potential problems ―Most entrepreneurs would not want to sit in an office, or deal with running a business and HRM‖ (36.05), and some of the team wanted to pursue the scientific side more than the business part.
What about Partnership or being hired by Investing Companies?
―If Shell wants to develop the project, they can get a huge advantage …They, the Venture Capitalists, will hopefully invest in ten projects, and they think short term‖
And the project‘s biotechnologists want to work on, and they will need more than a five year horizon ―They (Partnering Companies) will understand that it will take a
longer time to be developed… Tests on Jet motors alone would probably take 5 years,‖ (21.01)
The reason to go through an entrepreneurial thing is to get the money to do some-thing scientific, and to have enough resources to see the idea realized ―That‘s one of the reasons I would love to work with Shell‖
He definitely believes that participating in the Venture Cup has also made him more attractive as an employee
―I have been wearing a suit more often the last year than in my entire life… And I have also become more tolerant of these a bit ―smart ass‖ business people, that are really annoying, but they have a lot money.‖ But ―Most of the business things don‘t interest me - they are just a way to get to do the technology.‖