DeepTechU Day 3: Navigating Lab to Launch, Deep Tech Investment, and a Culture Shift Toward Commercialization
“The best companies we see have deep venture experience,” said Beckett Jackson, investing director, Boeing HorizonX. But they also have a grand vision about how the technology will become a product that gets into the hands of customers.
Keynote: Navigating Startup Success from Lab to Launch
Steve Gould, operating partner at Abundant Venture Partners, announced the morning’s keynote about the translation of world-class novel disruption to improve health for humankind: “I couldn’t think of a better person to give this address,” Gould said, introducing Jeffrey Hubbell, Eugene Bell Professor in Tissue Engineering and deputy dean for development at the University of Chicago Pritzker School of Molecular Engineering.
It all starts with an idea and the right team, said Hubbell, who has founded several companies and holds more than 75 patents. Launching (successfully) an idea involves many steps, Hubbell noted, stressing the importance of listening to feedback you receive when you present your story and learning from that: “The value of a launch depends on the idea… but the idea is far from enough – the idea has to be supported by a team,” said Hubbell. “That starts in the lab and then graduates and becomes something much bigger than your lab.”
Managing this transition is key, as it can be awkward to make the move from incubation to launch, Hubbell explained. How do you nurture and validate that idea in a way that would be meaningful to an investor? The transition also requires further building out the team, which should possess not only science expertise, but also business acumen. “There are thousands of ways [for an idea] to die and only some of them have to do with science,” said Hubbell.
Most importantly, the idea needs to address an unmet need, as per the age-old adage, necessity is the mother of invention, he noted. “It’s painful to discover, and usually you discover late in the day, that you solved a problem that was already well solved,” Hubbell added, “Sometimes you can solve a problem that doesn’t even exist.”
It’s important to ask if a market exists. If it doesn’t, why not? “Is it because no one has developed a successful therapy yet or is it because no one cares,” poses Hubbell. “Moreover, is the idea simple enough to carry out?” If the idea is so complex that it can’t actually be implemented, or if it’s cost prohibitive, it’s not useful. Hubbell said the complexity has to be justified with the intensity of the need.
The idea also has to be testable and “tellable.”
“One should have enough self-doubt to say that I’m going to work real hard, I’m going to turn every stone, I’m going to use every resource – and the resource is the team,” said Hubbell. “One must take care not to believe your own BS,” he added, stressing the importance of peer review.
“Invention is a sport that’s best played as a team.”
As Hubbell explained, investors bring “so much more than money,” including networks of new connections. He also noted that dilution isn’t the enemy – “it’s okay to own a smaller fraction of a larger pie.”
“The founder that is not willing to be actively involved is a downside” he added, “but the founder that doesn’t know when to get out of the way is also a downside,” said Hubbell.
In Conversation: Founders and Investors Discuss the Fundraising Process
Noga Tal, global head of partnerships, Microsoft for Startups, moderated the afternoon panel, which saw both sides – investors and founders – come together to discuss the fundraising process.
“I believe that any time an early investor like ourselves makes an investment, what we are actually making is a long term commitment,” said Alex Andrianopoulos, chief research and development officer at Kairos Ventures, which has made more investments in the last 12 months on an annual rate than compared to any other 12 month period – despite challenges related to the ongoing COVID-19 pandemic.
“More money is being invested in deep tech than ever today.”
– Alex Andrianopoulos
This has been seen especially during the last quarter, which Andrianopoulos said is evidence of a growing economy and, more importantly and relevant, “an increase in confidence by investors.” Still, he noted that VC investment is lacking outside of some of the “key centers,” such as Silicon Valley and Boston.
“It’s hard science and it needs to be very much so focused – but it also promises to change the world… and people are starting to recognize that,” Andrianopoulos said. “What you have to sell us on is the innovation – educate us about the technology and tell us why it’s the best thing since sliced bread.”
“It’s easy to get caught up in how innovative or cool the technology may be, but that speaks less to me than what the unmet need is that they are addressing,” said Rumi Morales, partner, Outlier Ventures, who said when she looks at deep tech innovation, she wants to understand, “at its core,” what it’s solving for.
As in other panels throughout the three-day conference, Maryellen Giger, cofounder, Quantitative Insights, advisor, Qlarity Imaging, A.N. Pritzker Distinguished Service Professor of Radiology at the University of Chicago, stressed the importance of building a solid team: “Startups should first look at the team,” said Giger, who explained that if you start off with a team of experts you can minimize the need for expensive outside help.
Fresh off the close of an oversubscribed $5.1 million Series A round, Jennifer Silva, cofounder and CMO, SentiAR added that founders need to go in with the “grand vision” but with the numbers to back it up. “If you don’t go with data,” she said, “you’re going on a promise.”
Fireside Chat: Deep Tech Commercialization
The DeepTechU conference closed out with a Fireside Chat between Vanessa Chan, Chief Commercialization Officer and Director of the Office of Technology Transitions at the U.S. Department of Energy, and Juan de Pablo, Vice President for National Laboratories, Science Strategy, Innovation, and Global Initiatives at the University of Chicago.
The conversation focused on several topics, such as working collaboratively between public and private sectors, reforming education across all age groups to focus on real-world skills, and working toward a culture change among PhDs that encourages commercialization.
“The way we did things before worked for the old world, but it’s not going to work for the new world,” Chan said. A part of this at the university level is the tenure system. “Until we change the tenure process… I don’t think you’re going to see a culture change,” said Chan, who said more emphasis needs to be paid on real-world impact. If the job is about publishing and not about bringing something to market, then people are going to be focused on early-stage research rather than the steps that need to be taken “to bring something to bear,” she explained.
“PhDs have not been taught the skills you need to think more about market pull versus technology push,” Chan added. New training is needed (at several levels), but is not the only barrier – there are many, Chan said, the most challenging of which is this shift in mindset.
“The biggest [challenge] is just really ensuring that we culturally have people on the same page as to why this matters,” explained Chan. “Anytime you’re doing a culture shift it has to start from the top down.”
Chan also noted that one of the biggest issues she sees – especially as an Asian woman who herself has shattered many glass ceilings – is the sense of not belonging. Her advice is to seek out mentors, tell yourself “yes you belong, yes you should be here.”
Her other advice for entrepreneurs – and for everyone – is to embrace failure.
“I think we stress ourselves out so much around being judged and defining… ‘This is what I’m going to do,’ she said, noting that things often do not go according to plan. “It’s messy, there’s going to be things that don’t work… Embracing a failure leads to success.”