Start-ups are small, newly created and in a phase of development seeking growth and entry into markets. The entire concept is considered quite risky as business outcomes are unknown and high amounts of resources and time are required by the founder. Arguably, more than any industry, medical device and biotechnology companies have the potential to have a measurable impact on healthcare, medicines and other world issues. Entrepreneurs in this field face the additional challenge of melding science with business, with high expenditure on research & development. As an entrepreneur, running your own company requires great persistence, flexibility and hard work, but the end result is the ability to create a product that may benefit the health of countless individuals, and hopefully reap financial benefits as well.
Here are the pros and cons of embarking upon a start-up:
One of the main reasons why inventors decide to ‘go it alone’ in their commercialisation, is the perks of flexibility and control – eg. setting up your own hours, creative control and unlimited earning potential. Entering into partnerships or joint ventures means you also need to consider the needs of the other party, which may be contradictory to your own needs.
Increased productivity in decision-making
As a sole owner, the only party that is involved in decision-making is you. No voting, collaborations or team meetings.
As a sole proprietor, your vision is uncompromised. Having a singular vision can provide direction, in contrast to partners that may have differing views that lead to compatibility issues.
In contrast to partnerships and joint ventures where there is a degree of risk sharing between parties involved, start-ups face a higher risk of business failure. A recent Harvard study noted that 75% of startups fail.
Failures and Setbacks
One of the unique challenges faced by biotech and medical device companies are dealing with setbacks and failures. A technology may fail in the final stages of clinical trials and adverse events and regulatory inaction can delays the commercialisation of a product. Embarking upon a start-up is not for the faint of hearted, but requires extreme persistence and commitment.
Running out of cash
A fundamental reason for start-up failure is running out of capital. The CEO or director must understand the funds available and how much capital needs to be raised to achieve certain milestones. Patenting an invention, then commercialising your idea can be expensive and full costs often aren’t known up front.
Specialist knowledge in capital raising is often crucial to getting a start-up off the ground and through the early stages; this is where Inner Maven as a trusted advisor can assist.