Chad Mirkin – Farley Fellow Q&A
Nanotechnology expert Chad Mirkin has co-founded four startups, including Nanosphere Inc., a diagnostic equipment maker that uses nanotechnology principles to test for medical conditions, and AuraSense Therapeutics, a biotechnology company that commercializes spherical nucleic acid (SNA™) constructs as gene regulation and modulation agents for diseases. He is George B. Rathmann Professor of Chemistry, Professor of Chemical and Biological Engineering, Biomedical Engineering, Materials Science and Engineering, and Medicine.
What, in your opinion, are the most important elements to starting a successful venture?
A good product and a good team. Patience is important, but I also like a little healthy impatience. And of course, you need money — that's important. Smart money is even better. Pairing up with the right investors is key.
How do you attract the right investors?
It starts with a portfolio of technologies that are well protected; by that, I mean they are patented not just in the US but abroad. But just having the technology is not enough. You need to know the market your technology can address. The inventors can learn for themselves or have folks from the Kellogg School of Management vet the idea.
View Chad Mirkin's faculty profileThe right business partners are crucial. You need a good technology team and development team, but you also need a good management team. And you need a good pitch. Remember your audience: the investor. You have to articulate what the technology is, what the opportunity is from a market standpoint, how long it's going to take them to get there, and how much money is going to be required to be invested. Be realistic — it always costs more than you think. Take how much you think you will need and double it.
With AuraSense, you didn’t work with venture capitalists. Instead, you partnered with a large pharmaceutical company. What are the benefits of this approach?
A partner with deep pockets can pay for a lot of the things that are very high-risk. You may give up a lot of upside potential as an individual, but you're also reducing a tremendous amount of risk.
On the strategic side, you want a group that is knowledgeable in your space, understands the magnitude of dollars required to really develop the technology, understands the timeline to get there, and in the end, actually has the sales force to distribute what you produce.
What should inventors look for in such a partnership?
The best partner is a company that is the biggest user of the type of technology you're trying to develop, that has the biggest sales force out there. They have the most penetration and they're not going to bury your product.
Another attractive option is a company that is the second-tier player in that space but is phenomenal in terms of their approach — think Apple in the PC world. These companies have a lot of credibility and a lot of innovation. They don't have maximum market penetration yet, but you understand as a user that they have the right trajectory.
Sometimes you will come across a company that wants to get into your space but doesn't really have the expertise to get there. These are good for an acquisition, but not so good for advancing a new technology. Big companies can be very fickle; they may be very hot on something today, then six months later a few people leave the company and their focus changes. Then you’re left high and dry. You need a partner who is not only there in terms of moral support, but there in terms of making a bet with you.
What advice do you have in terms of negotiating?
It's like science; it’s all about experience. It's all benchmarking. In a negotiation, you want to be hard-nosed and get what you want, but if it's important to the company, you also want the deal to go through. You can make one of two mistakes: you can shoot too low, or you can shoot too high. I've been involved in negotiations where the other group has walked, and that's a lose-lose situation.
It’s very important to do your research. This is the biggest challenge a new entrepreneur faces: they go in to talk to an investor, and the investor says, “This is the way we do things. This is the way we always do things.” That's baloney. Every deal is different. It depends on the investor, the time, the people, the technology, and how badly they want it. The entrepreneur is at a disadvantage because the investor claims, “I've got 30 to 40 benchmarks, and this how we do things.” The entrepreneur often has none — unless they've gone out and researched.