The most critical question: Why?

103pngWhen launching a new company, there are a number of factors to take into consideration. The reality is that only some inventions may be suitable for the creation of a startup company. Innovations may progress more quickly in a focused startup than in an academic lab or a large company.

A number of critical factors determine whether a startup is the most appropriate path to commercialization:

1. Demand: Potential of the core technology to provide a solid platform for multiple markets or product opportunities.

2. Competition: Identification of other companies that offer similar solutions.

3. Licensing: Likelihood of interest from existing companies in licensing the technology.

4. Funding: Availability of capital to build and grow the business, together with the interest, capabilities, and track record of likely investors.

5. Commitment: Level of commitment and involvement of the inventors.

6. Support: Presence of a true business champion for both the technology and the new venture.

7. Management: Experience, passion, and drive of the startup’s executive team.

Read More: Startup Guide - Harvard University

 

Key Considerations before taking the big jump

Below are items to consider when deciding whether or not to start a NewCo:

  • Is the invention a disruptive technology? If not, how would it be categorized?
  • How soon can a commercial product come to market?
  • What is the level of risk associated with this startup?
  • Does the technology have clear applications and a definable market?
  • Who owns the intellectual property (IP)?
  • What will be my role in the new company: full–time employee, advisory board member, executive, or consultant?
  • What are the goals for the company? Is it to grow the company and position it for an acquisition or a possible initial public offering (IPO)? Or, is it to build a small, yet sustainable business?
  • Will capital from private investment companies be needed? If so, will the company eventually be sold or go public? Private investors rely on these exit strategies to get a return on their investments.
  • What is the current value of the company? Pre-money valuations (valuation of a company prior to an investment) of early-stage companies are generally in the €1–3 million range.