Advice to Scientist Entrepreneurs: 3 Alternatives to Venture Capital
R&D and a continuous flow of innovation is essential to the value of existing midsize to large companies, and to the continuous improvement of our global quality of life. Scientists and engineers should bear this in mind when considering the best path forward to commercializing their ideas.
In early 1999, I became a partner at an established top tier seed stage venture fund in Southern California. Since then, I have seen the transformation of venture investing from higher risk seed investing to a stage where companies need to be more mature and, in some cases, generating revenues. As such, entrepreneurs must be much more aware of the various options that they have to commercialize a novel technical invention, discovery, or new business process or service model.
There are three things that a scientist entrepreneur should consider as an alternative or supplement to venture capital.
- Accelerators and university incubators. These organizations have stepped in to fill the gap left behind by the seed VC investment firms.
- Early sale or technology transfer license to existing large companies. These companies value access to the technical innovations, unique facilities, and institutional knowledge at universities.
- Collaborative R&D programs with government laboratories and economic development initiatives. These programs provide scientists more time to pursue higher risk capabilities more thoroughly, rather than developing business models and teams to commercialize only a portion of a technology.
Careful consideration of the best commercialization plan will increase the chances of seeing one’s idea have a direct impact on society. This will not only expand the knowledge base of new ideas being successfully commercialized but also speed their time to market.