For Scientist-Entrepreneurs: You'll Need A Lot More Than Persistence To Survive

The entrepreneurial inventor involved in the start-up of a company would benefit from a careful reading of the article titled “Seed Money Blossoming Again For Entrepreneurs“ (The Scientist, June 22, 1992, page 1). There are a lot of good lessons in it. As a scientist and inventor (of a chemical calculator) I, like biotech entrepreneur Anthony Guiseppi-Elie, who was quoted in the article, have found that investors “no longer [have] an interest in funding a bright entrepreneur simply because he has a good product idea“ and that they tend to notice you only when you reach that “million dollars in sales“ level. I am pleased that Guiseppi-Elie's persistence paid off; after numerous rejections by venture capital people, his firm was able to survive, thanks to a $150,000 investment from the Ben Franklin Partnership Program. However, while I agree with hirn that persistence is very important in attracting venture capital, persistence alone will not be enough, since most inventors' products never get to that magically attractive million-dollar stage. By the time most entrepreneurs understand their needs, they have exhausted their resources and are too discouraged to continue. In my case, although I am far from that million-dollar level at the moment, I intend to get there—but when I do, I may not need venture capital backing to get me to the next stage. The most discouraging part of my entrepreneurial venture has been to discover how few people have shared enough ofmy vision to help me out at the very beginning. In my efforts to attract the investment of these people, I have had to learn a whole new set of business skills in order to promote my invention. Scientists generally have neither those skills nor the willingness to spend the time it takes to learn them. Even if they do, the amount of financial support they need is apt to exceed their most extravagant estimates. Soon they will have exhausted their own discretionary funds, credit lines, and support available from family and friends. And they cannot hope to obtain a bank loan—with or without a business plan—secured only by an “idea“ and minimal sales. One would like to think that public-sector sources of financing, such as the federal Small Business Innovation Research (SBIR) program, would be a source of comfort to the scientist-entrepreneur. However, applications for an SBIR Phase I award are brutally competitive, are solicited only once a year, require six months to process, and are meant to support not your business Operations, but only a six-month feasibility study. You then need to apply for the two-year Phase II award, ranging from $250,000 to $500,000. Complicating my application, as principal investigator I had to obtain permission and be willing to take a leave of absence from my university for the full 2½ years of the awards. If the United States really wants to encourage start up entrepreneurial ventures that may lead to new technologies, there must be a way for the private sector to share the risk of investment. I would propose that America's corporations and executives show their commitment to helping start-up companies by donating a percentage of their earnings to what I would call “America's Future Capital Fund.“ The fund would be administered by local small-business development groups in the form of low-interest, unsecured loans or grants, with a minimum amount of paperwork and processing delays. The funds would be issued to those start-up companies that have the potential to create a new product—preferably exportable. The corporate executives might also be willing to donate one day a month to serve as active members of the company's developing management team to help it get on its feet. With this type of teamwork, the U.S. could begin to reshape its technological future. Bert Ramsay is a professor of chemistry at Eastern Michigan University in Ypsilanti and founder of Chemical Concepts Corp., Ann Arbor.

For Scientist-Entrepreneurs: You'll Need A Lot More Than Persistence To Survive

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