BioStartup Advice

Glossary

Entrepreneurship

Accelerator

 A program, group, or individual who connects startups with mentors, resources, funding. Builds upon the start-up’s foundations (already having an idea or business model in place) in order to advance their growth. Typically involves a limited period of intense support and effort with a significant milestone achieved at the end. They often also provide a space to work and shared resources and so overlap with incubators. In exchange, they typically get a certain percent equity in your company.

The following are examples of accelerators in the bioscience/technology development realm:

Angel Investor

An individual who provides capital to a business start-up, usually in exchange for shares or partial ownership of the company. Invests may be one-time or ongoing, depending on need.

The following are examples of angel investor groups:

Burn rate

The amount of money you spend on your business per unit time. You need around a year’s burn rate to keep your company functioning while you seek other sources of funding, such as grants, angel funding, or venture capital.

Contract Research Organization

Contract Research Organizations (CROs) are hired by other companies to conduct clinical trials and other research support services. for example, they may used by research, medical, or pharmaceutical companies to outsource manufacturing and research.

What Are Contract Research Organizations? – Article presented by The Balance Small Business includes examples and definitions

Top 10 Contract Research Organizations to Watch in 2019 A descriptions of 10 CROs by Proclinical

The Triangle CRO industry: Where women rule. By David Ranii. News Observer, January 17, 2015. An article describing a prominent role for women in the NC Research Triangle area CRO industry.

Crowdfunding 

Utilizing social media and online groups to gather small amounts of capital from multiple people in order to fund an idea. This is known as alternative finance.

The following are two popular crowdfunding websites for science projects:

  • Consano: “[C]ollaborates with development and research administration offices at a variety of research institutions to source high quality and internally reviewed research projects.”
  • Experiment: “[A]n online platform for discovering, funding, and sharing scientific research… [Experiment is composed of] a team of scientists, designers, and technologists passionate about helping ideas grow.”

Customer Discovery

Process of learning the need in the marketplace, who needs it (including stakeholders), and the value proposition.

Dilutive vs. Non-Dilutive Funding 

Describes whether or not the investor in your project gets the right to some of your business equity and profits (called “dilutive” because your equity and profit is diluted by their investment) or does not get any of your equity or current or future profits (called non-dilutive because your equity does not get diluted by their investment). You can set aside some shares to not be diluted by a dilutive investment so that you do not lose ownership of your company.

Examples of dilutive vs. non-dilutive funding are:

  • Dilutive: Angel investors, venture capital, potentially your friends and relatives depending upon what arrangement you make with them.
  • Non-Dilutive: SBIR/STTR, loans, winning a contest (in most cases), personally financing it.

Equity

The distribution of ownership of a company.

Exit Strategy

A plan by the entrepreneur to sell their ownership in the company to another company or investors. Usually detailed in the initial business plan, prior to starting the business.

The following articles detail potential exit strategies:

  • Five Smart Exit Strategies: Written by a business investor and mentor, details 5 exit strategies that might be employed when it’s time to make a switch.
  • How To Choose An Exit Strategy: Looks at options and considerations to make when it’s time to employ an exit strategy for a business.

Funding Rounds

The different stages of funding available for startups, which include seed/angel funding, as well as Series A/B/C funding or additional. Series funding rounds typically align with optimization (Series A), building (Series B), and scaling (Series C).

The following articles detail series funding, as well as additional funding types:

Incubator 

An organization that supports the growth and success of startups by providing physical and service needs such as physical workspace, shared facilities, guidance, and some funding. Today, many incubators also play some role as an accelerator, too.

The following are examples of incubators:

Inflection Point

A point at which the focus in a business changes in a major way, for example, when a startup goes from developing and proving the product to serving the customer’s needs and marketing. If you only enjoy the science development phase, this inflection point may be a time to consider selling the company.

The following are examples of inflection points:

  • When you develop partnerships
  • Make a key hire
  • Obtain major funding
  • Commit to the requirements of a paying customer, etc.

Initial Public Offering (IPO)

The first time company shares are sold to the public. It allows the company to raise money from public investors.

Intellectual Property

A collection of ideas and concepts, intellectual property, (IP) refers to the ownership of ideas. IP can be protected through patents, trademarks, or copyrights. It is important to start protecting your intellectual property early in the process of starting a business and not disclose your product’s secrets, not only to prevent another business from using your idea, but also because it can prevent you from obtaining a patent.

The following are resources where you can learn more about intellectual property protection in the United States:

  • United States Patent and Trademark Office: “The United States Patent and Trademark Office (USPTO) is the federal agency for granting U.S. patents and registering trademarks.”
  • U.S. Copyright Office: “The U.S. Copyright Office promotes creativity and free expression by administering the nation’s copyright laws and by providing impartial, expert advice on copyright law and policy for the benefit of all.”

Material Transfer Agreement (MTA)

An MTA is a contract used when researchers share tangible assets. It defines the rights and obligations of both parties and protects intellectual property.

Minimum Viable Product (MVP)

A minimum viable product is an early version of the product that entrepreneurs can use to attract early adopter customers and demonstrate the viability of the concept to investors.

Non Disclosure Agreement (NDA)

An NDA preserves the confidentiality of information in order to preserve its value.

Patent


The right to prevent others from making, selling or using an invention for a period of time. The right is granted by the government to unique inventions. Notice that it is a negative right, that is, a right to prevent use by others. The three types of patents are utility, design, and plants. A provisional patent, which is less complex to obtain, protects invention before a full patent for up to 1 year.

Resource: United States Patent and Trademark Office

Pitch

A presentation of a business idea to a potential investor. Can be a formal presentation, a conversation, or a written document. 
Related Terms:

  • Pitch Deck – An organized presentation of a business idea pitch, often in the form of slides.
  • Elevator Pitch – A briefer version of a pitch, good for use in a networking situation. Named after the short time you have during a quick elevator ride.

Prior art

Evidence that your invention was already available or publicly known, even in part, before you applied for your patent.

Proof of concept

The point at which it seems feasible that the product can be developed and will address the need for which is designed. Indications are that it will be successful and indications of likely failure are not apparent.

Prospecting

Identifying customer prospects to start your sales. Developing a database of potential customers and converting them to actual customers.

Return on Investment

The ratio between how much money is made upon selling or “cashing out” an investment and how much was invested. Investors want a high return on investment.

Seed Funding

Capital that initially funds a new business or idea, attained from individual assets, family/friends, venture capitalists, or angel investors. Seed investors often gain a stake in the business as a result of funding the start-up. The NIH’s SBIR and STTR programs are a major source of seed funding in the United States.

The following are articles that detail how to determine the necessity of seed funding and how to find it::

Series A Funding

The first venture capital funding for a new business. The first stock issued to investors after common stock is given to founders, employees, and angel investors.

Shares

Single units of ownership of a company.

  • Preferred shares: Paid dividends ahead of common shares but have no voting rights. Less potential for long term growth.
  • Common shares: Paid dividends last. Have voting rights. Potential to make more money than preferred shares long term.

Tangible Assets

This includes things used in research with commercial value, like mice, or intellectual property. To share them with other researchers, you need a Material Transfer Agreement.

Technology Readiness Level (TRL)

A widely used metric of the level of development of a technology with the highest level being ready to be deployed.

Level 1: Basic Research
Level 2: Applied Research
Level 3: Critical Concept or Proof of Function Established
Level 4: Lab Testing/Validation of Alpha Prototype Component/Process
Level 5: Laboratory Testing of Integrated/Semi-Integrated System
Level 6: Prototype System Verified
Level 7: Integrated Pilot System Demonstrated
Level 8: System Incorporated in Commercial Design
Level 9: System Proven and Ready for Full Commercial Deployment

Full Descriptions of TRL Levels – Available through bnl.gov

Technology Transfer Office

These university offices are responsible for the commercialization and transfer of technology from the university to the marketplace.

The following are examples of technology transfer offices in universities and related organizations:

  • The Office of Licensing and Ventures, Duke University: “Mission: Through our partnerships with faculty, industry, entrepreneurs and investors, ensure that Duke innovations reach the marketplace for the benefit of society and to enable future investment in Duke research and innovation”
  • The Office of Research Commercialization, NC State University: “The Office of Research Commercialization (ORC) plays a crucial role in this by protecting and promoting University research discoveries and intellectual property, working with and guiding industry partners, and promoting the acceleration of startups. We’re driving economic growth by facilitating the commercialization of research discoveries.”
  • AUTM (formerly the Association of University Technology Managers): A non-profit engaged in supporting professionals in developing academic research “that changes the world and drives innovation forward.” Members work at universities, centers, hospitals, businesses, and government organizations around the world. The organization works with commercial partners leading to the creation of products, services, and start-ups. Support for members is wide-ranging from corporate engagement to intellectual property protection.

Valley of Death (Funding) 

This is the time from the initial funding received by a startup company until it starts generating revenue, when it is difficult to obtain funding because the product and business are not yet proven but money is still being spent to develop the product, obtain any approvals needed, and market it. The name comes from the fact that this is when many startups fail.

The following are examples of ways to span the funding Valley of Death successfully:

  • Accumulate money ahead of time.
  • Keep a source of income until you are through this period.
  • Consider crowd funding
  • Seek business grants and enter contests
  • Obtain loans or lines of credit
  • Seek funding from friends and family
  • Join an incubator for startups that offers cash, resources, and/or consulting
  • Barter service for service
  • Form a joint venture with an organization that benefits from your product
  • Commit to your major customer and offer perks such as meeting their requirements.

Value Proposition

The reason someone will want to do business with you. It includes:

  1. The customer’s need or problem
  2. What your product offers, its benefits
  3. How those benefits solve the customer’s need or problem
  4. Why your solution and delivery is the preferred one

Venture Capital 

Funds provided to a startup that is seen as having long-term growth potential. Controlled by an individual or group, these investments are made in return for significant ownership of the business, which is expected to have a high rate of return based on metrics such as market or predicted consumer needs, competitiveness, quality of the product relative to other solutions, innovation, the business’s past success, and the success of earlier investments.

The following are examples of bioscience/biomedical venture capitalists in North Carolina:

  • Golden Pine Ventures: “The company’s mission is to aggressively seek out biotechnology and biomedical opportunities developed by leading researchers and grow them into valuable businesses.”
  • Idea Fund Partners – Venture Capital. Co-founder Lister Delgado, seed and early-stage technology-focused.
  • Pappas Capital: “For nearly 25 years [they] have been investing in and building innovative companies that are developing the next generation of life science products and technologies.”

Venture Capital Deal Terms – Glossary of venture capital terms you can look up as needed.

Research

Electronic Research Administration (eRA) Commons 

The online NIH administration website for interacting with granting agencies throughout the life of a grant, from application to final reporting.

eRA Commons

Funding Opportunity Announcements (FOAs)

These documents announce that a Federal agency will award a Discretionary Award. The FOAs may be requests for applications, solicitations, or notices of funding and are typically competitive.

Omnibus Solicitation

A document published by Health and Human Services (HHS) describing the funding opportunities they offer for support of small businesses having technical ability to do research that meets the missions of their agencies on the topics described in the document.

The full names of the documents and locations are:

Other Glossaries of Research and Entrepreneurship Terms

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR)

(SBIR/STTR are programs of the federal government that provide seed funds to small businesses to support research and development with potential for commercialization.

The distinctions between SBIR and STTR are:

  • SBIR funds small early stage businesses that are developing and want to commercialize innovative biomedical technologies.
  • STTR fund small businesses that are developing and want to commercialize innovative biomedical technologies in collaboration with a non-profit research institution. The business must perform at least 40% of the work and the research institute must perform at least 30%.