Lab Curiosity to Commercial Process – What It Takes
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The road from the chemical engineering lab to a commercial process is a difficult one. It requires not only great technology and intellectual property (IP), but also, a market, a great team of generally multi-disciplinary staff who can work together effectively and are driven, money, and a lot of perseverance. For the case of a large company with deep pockets and an entrenched business it is almost impossible to start a radically new product line because of the immense market threshold required (that is, for a large company having $25B/yr in revenue, the new product must typically have a potential market of maybe $500M/yr, minimum). Product line extensions are much easier (less risky, less time to market – hence, less $ required). For the case of a startup, those engaged need to be comfortable starting with almost nothing, bootstrapping, and willing to spend a lot of time searching for funds, partners and customers. For startups, those involved are usually paid below market rates and are engaged out of personal interest, the startup environment, and the potential for ultimate reward. Those involved in a startup need to understand that the risk takers (i.e. VCs) look almost entirely at the startup management as the most important consideration; IP is important from the aspect of protection, but is secondary and, hence, faculty members spinning startups out of their labs are generally lousy CEOs.
This talk will present first hand examples of both (1) the path taken from a laboratory curiosity to a successful commercial process at a major company (Dow Chemical) and (2) the paths taken by various startups trying to commercialize lab IP out of the university (CU). “Skunk work” was a key activity for the large company success story and an example of how perseverance and personal career risk taking was key – it is difficult to be an entrepreneur within a large company. A key decision for the university spin-off is whether to accept VC funding, or, to bootstrap. That decision needs to be made based on two key aspects: (1) how much capital is needed (“Valley of Death”) to demonstrate the concept at a scale where it is believable and (2) is there a large existing or potential market to focus on that can be penetrated within 2 to 3 years (VC funding to continue to do research is typically non-existent). VCs will generally not fund without protection (i.e. IP) and the startup has only 2 to 3 years to success before the co-founders need a “bridge loan” and are effectively diluted in equity to the point where they lose interest and lose “their” company.
Universities are typically great places to invent “platform technologies” that can then be developed through licensing to large companies or establishing startups. Many students “don’t want to work for the man” because they have seen first-hand how their parents have been forced into early retirement by large companies. However, they also need to understand that “get rich quick” does not happen very often today, particularly the last 10 years of two major economic downturns and the intense competition of a global market. Insight, based on real experience, will be given to students and others who want to try the chemical engineering entrepreneurial route. The speaker does not in any way profess to be an expert in startups; and, it is hoped that discussion will follow with members of the audience providing their input as well.
Alan W. Weimer, H. T. Sears Memorial Professor of Chemical and Biological Engineering, joined the faculty of the University of Colorado in 1996 after a 16-year career with the Dow Chemical Company. He was named Dow Research Inventor of the Year in 1993, and received Dow’s “Excellence in Science Award” in 1995 for commercializing high-temperature processing to produce advanced materials. He was named University of Colorado Inventor of the Year in 2004 and received both the campus-wide and the College of Engineering and Applied Science Faculty Research Awards in 2005. He is recipient of the 2005 DOE Hydrogen Program R&D Award for developing solar-thermal technology to split water, the 2009 AIChE Thomas Baron Award in Fluid-Particle Systems for his pioneering effort to functionalize fine particles with thin films, and the 2010 AIChE Excellence in Process Development Research Award for his persistence to commercialize his academic discoveries. His former students have co-founded two spin-off companies out of his university laboratory (ALD NanoSolutions in 2001 and Copernican Energy, now Sundrop Fuels, in 2006). He is an inventor on 29 issued U.S. patents and an author of 150 peer-reviewed publications. He received a 2004 R&D 100 Award for his invention and commercial development using atomic layer deposition to functionalize fine particles (i.e. Particle ALD). He recently received the 2011 State of Colorado Cleantech Industry Association Award for “Excellence in Bio-Derived Technology Commercialization”. He teaches the capstone design sequence in chemical engineering at CU, but, also has a research team of 15. He anticipates potentially two additional startups out of his university lab over the next 5 years based on projects currently supported by the Advanced Research Projects Agency – Energy (ARPA-E).