How to tell if your scientific breakthrough can be a viable business

Scientific research and starting a company require very different skills, but they have at least one thing in common: They both require years of hard work with no guarantee it’ll pay off.

Sound like your cup of tea? Then the scientist entrepreneur path might be for you.

It’s not an easy one. Achieving a scientific breakthrough may take years of research and experimentation, with plenty of failure along the way. If you hope to commercialize the innovation your research yields, be prepared for a similarly tricky undertaking, but one that requires totally different skills—like raising money, hiring employees, and developing a go-to-market strategy.

“It’s not unreasonable that one day you’re mixing chemicals in a lab and the next day you’re the CEO of a company—there’s a learning curve there,” Cyrus Wadia, CEO of Activate, a fellowship program for scientist entrepreneurs, told Morning Brew.

The transition requires something of a paradigm shift, he said: In the lab, the researcher is the go-to expert. Building a business, on the other hand, requires knowing when to turn to others when you’re not the expert.

“You are not going to be Elon Musk tomorrow. That’s not the typical path,” Wadia said. “So it takes a lot of grit and perseverance. That’s just entrepreneurship, but entrepreneurship for societal good is a harder chore.”

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Etosha Cave was on the path to finishing her PhD at Stanford University about 11 years ago. As she considered her next steps, she did some entrepreneurship coursework and sought advice from her adviser and from the university’s innovation transfer program.

Cave thought her research might be too premature, but she was encouraged to start her own company. After a potential opportunity to work with a government agency fell through, Cave met Activate’s founder; her team applied for the program and got accepted. She co-founded a sustainable fuels startup, Twelve, and credits its success to this experience. The company has raised over $900 million to date and operates a commercial plant in Washington state.

Twelve’s AirPlant1 is producing 50,000 gallons of jet fuel annually “from CO2 and water using electricity and metal catalysts,” Cave, the company’s chief science advisor, told us. A larger-scale facility is slated to eventually make tens of millions of gallons per year.

“I don’t know that there was any other pathway for us to develop this technology, at the time,” she added. “My life would have been completely different.”

Twelve’s co-founders relied on grants and other forms of public funding to support the buildout of a prototype. After that, they were able to attract angel investors and other funders before eventually going to institutional investors.

On the path from researcher to entrepreneur, Cave had to learn about product-market fit, customer discovery, how to scale manufacturing, how to fundraise, and how to build a company. She credited the National Science Foundation’s entrepreneurial training program, I-Corps, with helping her learn some of those skills.

“Just like finding a college for school,” Cave said, “you need to find the appropriate program and accelerator that works for you.”

Cave serves as an executive-in-residence and an interim managing director for Activate, which accepts between 40 and 50 fellows a year and supports them via an annual salary, benefits, direct and peer mentorship, regular speaker programming, cohort meetups, and other resources.

Getting down to business

When coming out of a research setting, it’s important for founders to figure out who has access to the IP associated with the project—and then get control. University technology transfer offices can help research existing patents and negotiate IP rights.

IP ownership disputes are “among the most common reasons a promising research spinout stalls in diligence,” according to the Computing Research Association.

When pondering an exit from academia, it’s also important to consider which of the project team members will work for the company and which will stay at the university, according to Jared Friedman, managing director of software and general partner at Y Combinator. Scientist entrepreneurs sometimes assume it’s best to hire an outside CEO to handle the business end, but he cautioned against this strategy. Most scientists that Y Combinator funds have no previous business experience.

“The people who did the original research will be far more invested in the success of the venture than any outsider,” Friedman wrote in a blog post. “They are also far more qualified to build a company around it because their domain knowledge of the field is much more valuable than whatever general business skills an outside CEO would bring.”

Plus, additional research might be needed as the company gets off the ground—and those involved in the original research are best positioned to help.

Rather than going directly to venture capital, Friedman recommended self-funding and cobbling together money from angel investors, family and friends, and government research grants. Researchers might benefit from government funding like Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants.

As for when to strike out on your own, Friedman argued that most scientists wait too long: “There’s a temptation to make the technology perfect before spinning out, and there’s always ‘one more experiment’ you could do. If you don’t stop this cycle, you’ll never leave.”

Other considerations for research scientists looking to start a business, per the Computing Research Association, are how to establish a founding team, choose the right funding path, and build a solid research publication record to support your business case.

Christina Smolke, CEO and co-founder of biosynthesis startup Antheia, considered many of these questions when she was in the early stages of spinning research out of Stanford University.

After deciding to build and lead the company, she reconnected with an early researcher on the project, Kristy Hawkins, who joined as co-founder and CSO. These early decisions weren’t easy; Smolke had young children, a tenured position, and “a strong research environment,” but she encouraged other scientists to take the leap if they have the opportunity. Antheia benefited from Stanford’s support, as well as an SBIR grant through the National Science Foundation and a National Institutes of Health award.

“Go in with eyes wide open, take the time to think through the hard questions, and talk with people you trust,” she told us via email. “It can feel like a scary decision, but remember that for a breakthrough to reach its full potential, it may require a different environment, a dedicated organization, and the persistence to carry it forward.”

Ultimately, the decision of whether to start a company based on a scientific innovation comes down to one key question, experts say: Does your innovation translate into a product that solves a problem for a customer?

“People buy outcomes, not novelty,” Chris Murphy, founder and principal of Australia-based growth practice Murphy and Company—which works with deep tech, aerospace, and defense founders to market their innovations—told us. “So the art really lies in articulating the benefit and not teaching the science. What I see a lot is, you will have a brilliant academic…They have this novel thing and they go, ‘You know what, I’m going to sell this.’ And what they find is, they have a solution looking for a problem.”

This process might require reverse engineering the solution to identify a customer pain point and then figuring out how that translates into a commercial product.

“Talk to people who have commercialized in that industry or are commercializing analogous products,” Cave said. “Talk to customers. Make sure it’s a problem that they have and they need to have solved, and that they’re really eager to have it be solved.”