August 2010

Starting Up a Startup

Cary selected an attorney to handle the IP aspects of Omniox, and he also chose a corporate attorney to assist with the technical aspects of starting a business. Both attorneys accepted deferred payment, receiving their fees once Omniox had raised enough venture funding. It was important to Cary that both attorneys were the best in their fields, as this gave credibility and a sense of permanence to Cary’s fledgling company.

Startups---OmnioxThe Valley of Death

Omniox was now in a transitional phase, during which, in general, the financial support is weakest. Up to that point, their studies had been funded by traditional research grants, but the science was not yet mature enough to convince venture capitalists to provide commercial funding. This tenuous period is often referred to as the “Valley of Death” for young companies.

However, Omniox was fortunate. The company received a two-year Rogers Family Foundation “Bridging the Gap” award for translational research, allowing research to continue during the year in which Cary was meeting with lawyers and recruiting scientists to Omniox’s advisory board.

A number of other factors also worked in Omniox’s favor. One, ironically, was the economic downturn: biotechnology companies, young and old, were struggling to survive, sometimes without success. Omniox was able to acquire used lab equipment at bargain basement prices— a million dollars’ worth purchased for $25,000, Cary estimates. Another helpful factor was Omniox’s location in the San Francisco Bay Area, where prominent law firms were more willing to take chances on biotech start-ups. What’s more, Omniox was able to take advantage of a new institute at the University of California called QB3.

The Incubator

The California Institute for Quantitative Biosciences (QB3) is a consortium formed by three UC campuses: Berkeley, San Francisco and Santa Cruz. One of its goals is to “speed the movement of innovation from the laboratory into peoples’ daily lives,” according to the 2001 Governor’s Budget Summary, in which the foundation of QB3 was established.

Startups---Crawford
California Institute for Quantitative Biosciences Associate Director Douglas Crawford

In the institute’s early days, Associate Director Douglas Crawford and Director Regis Kelly sifted through case studies of UC faculty members, postdocs and graduate students who were interested in starting businesses. But, “the cost of a start-up is prohibitive,” explains Crawford, and all they found was frustration. Crawford and Kelly wondered how they could leverage UC resources to help scientist-entrepreneurs, with the ultimate goal of increasing societal impact. Soon, the QB3 Incubator Network was born.

The Incubator Network rents small office and lab spaces – in some cases, as little as 120 square feet— to young companies, thereby minimizing the cash demands on start-ups. Most of the spaces, called “Garages” in recognition of the innovators such as Bill Hewlett, Dave Packard and Steve Jobs who founded companies out of their own garages, are at the UCSF Mission Bay campus; a smaller amount of space became available at UC Berkeley in May of this year.

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