Leaving the nest
Biotech startups face challenges of real world
Science can be big business, but that doesn’t necessarily mean scientists are the best businessmen.
Nevertheless, many scientists-turned-entrepreneurs are forced to face the harsh realities of the big business world in a hurry when leaving the relative safety and ease of biotechnology incubator facilities and striking out on their own.
Kevin O’Sullivan, president and CEO of Massachusetts Biomedical Initiatives (MBI), a shared space and incubator facility near UMass Medical Center in Worcester, said learning the practical business side of biotech can be daunting and full of unexpected hiccups for would-be scientific entrepreneurs.
"They’re scientists," O’Sullivan said. "They’re used to spending time doing research. But once they go out, much to their dismay, they have to spend time on mechanical stuff, on operations or maintenance. They need to deal with the leaky roof or when equipment breaks down."
O’Sullivan said the average stay of most startup biotech companies at MBI is between 24 and 36 months. They are only required to sign a one-year lease, and have access to fully permitted and secure lab space, high-tech equipment and administrative support as part of the deal.
Reality bites
The "real world" is much less kind.
Judy Carmody, president of Avatar Pharmaceutical Services, a contract research organization serving the biopharmaceutical industry, moved out of an MBI incubator space into 10,565 square feet in Marlborough last June and has 16 employees.
Carmody said there were lots of perqs MBI offered that she didn’t have once she moved out on her own.
"The biggest challenge is having to learn everything that you took for granted at the incubator," said Carmody. "A lot of the facility and administrative things, the permitting etc., they took care of. You kind of get a crash course in business as you venture out on your own."
She said she was also unprepared for the minutiae of moving into her own facility.
"The things you don’t know are the scariest," Carmody said. "In this industry we’re highly regulated, down to where you can put your fire extinguishers. You just don’t know what you don’t know."
Carmody said the mundane little details of running her business can create big headaches, and often distract her from her main goal – making money.
"I would just as soon be generating revenue," rather than dealing with nagging details, she said. "This is my business and I want to be involved in those decisions, but overall, I’d much rather focus on the business and not be distracted when I need the rodent people to come in and check the traps."
Elizabeth Higgins, founder and CEO of GlycoSolutions, currently leases space at MBI. She said that because her company provides services to the biotech industry and is not a traditional research and development operation, she is facing an entirely different set of challenges as she tries to move into her own space.
GlycoSolutions provides biochemical analysis for companies on a contractual basis.
"Usually what happens with more traditional (biotech) companies is that they move into a small space, and then get some kind of venture capital funding soon afterwards," Higgins said. "But in the service industry, we grow more like a regular small business would. It becomes a huge problem when trying to find space of your own."
Limited options
Higgins said the space she currently leases from MBI will be adequate for the next few years, and she enjoys the tenant-landlord relationship she has built with the company. But when she eventually does move out on her own, she said she sees very limited options in terms of space for her company.
"There are options for incubator-sized space, but between that and some 10,000-square-foot lab, there’s nothing," said Higgins. "There’s a real need to create a stepping stone between the incubator and the huge space, especially here in Worcester."
Higgins said she has examined possible solutions to the problem, including looking into large developments with space to spare, but said the needs of her business prevent a sublet agreement or any situation in which she may have to shuffle around a lot.
Because GlycoSolutions is FDA-regulated, Higgins said, she needs secure, access-controlled lab space, which is difficult to find.
She said one of her goals is also to find space that is attractive and professional looking, rather than just a storefront in a strip mall.
O’Sullivan said it can be easy to be lulled into a sense of complacency in an incubator facility, and encourages his tenants to move out, regardless of the difficulties.
"We’re not here to enable," O’Sullivan said. "(MBI tenants) are big boys and girls. It’s tough out there on their own, but that’s why they started the business up in the first place, to get out there and celebrate their entrepreneurship."
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