John Beadle, MD, Co-founder & CEO, PsiOxus

1. 1
SmartScience
for SeriousDisease
Starting Up
January 2015

2. 2
Starting Up
Idea
Funds
Team
Plan
Execute

3. 3
Starting Up
Idea
Team
Funds
Execute
Plan

4. 4
SmartScience
for SeriousDiseaseDo you have
a good idea ?

5. 5
Do you have a good idea?
• Can you satisfy an unmet need?
– What problems will you solve?
– Is it a problem worth solving?
• Who will buy your idea?
– Who will the end customers be for your idea?
– Who will buy your idea or product from you?
• Why can you do it better than others?
– What are the key features and benefits of your idea?
– What are the key weaknesses?
– How can you prevent others from doing the same thing?
• Current IP : is it yours, if not how will you get it?
• Future IP?
• Know how?

6. 6
Do you have a good idea?
• Can you make it work?
– Is it feasible?
– How much will it cost?
– How long will it take?
– What does the route map look like?
• Is there an early proof of concept?
• Do you need a prototype?
• What are the tasks, stages and gates?
• What are the stop and go criteria?
• What are the value inflection points?

7. 7
What can go wrong?
EVERYTHING
RISK

8. 8
SmartScience
for SeriousDiseaseDo you have a
good team?

9. 9
Do you have a good team?
• A good team really matters
– “Always invest in a A Class team with a B Class idea
rather than a B Class team with an A Class idea”
• Decide who is in and who is out?
– Not all inventors (or competition team members) need
to be in the business … or stay in the business
• Who is the leader?
– Teams without good clear leadership rarely do well.
– Do you need a leader from outside of the current team?
– The leader today may not be the leader in the future
• So what do the others do?
What are the roles of the other founding team?

10. 10
• Balance is important
– Consider the balance of skills / personalities / styles
• “Science” and “Business”
• “Extroverts” and “Introverts”
• “Big Picture” and “Detail”
• “Starters” and “Finishers”
• “Thinkers” and “Doers”
Do you have a good team?
• Mind the gaps
– What other roles / skills are needed?
– Identify the gaps and how will you fill them?
– Beg – borrow – steal additional expertise early on.
– Potential investors, advisors and customers are often
very useful resources.
But in a Start-Up EVERYONE must
be a willing to do EVERYTHING

11. 11
Teams over time
Can you enjoy working effectively together long term?
– Projects change
– Companies change
– People change
• Address the hard issues early on
– Agree who will do what … because someone has to take
out the trash
– Agree who will get what … deal with equity issues
– Contracts are there for when things go wrong
– What will happen if someone leaves … founder vesting?
• What if they are good leavers?
• What if they are bad leavers?

12. 12
SmartScience
for SeriousDisease
What do you
do next?

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Tech Transfer Offices
• “What I hate about Tech Transfer Offices”
• Wide range of capabilities and approaches
– Degrees of capabilities : expertise / experience /realism
– Depth of resources : cash / people / contacts
• Engage with them early on:
– What IP is available?
– What company structures are possible?
– Negotiate when necessary
• A spin-out is not necessarily the best thing to do
– Is this a company or a project
– Leverage University resources whilst you have them
– Deciding when to spin out is a strategic issue
Get to know the reputation, preference
and working style of your own TTO

14. 14
What do you do next
• Negotiate IP (if required)
– A bad licence will kill a good idea
• Don’t assume that your TTO has the right answers
– May need a letter of intent initially
• With exclusivity
• Long enough option period … at least 6 months
– Negotiate a full licence relevant to the business plan
• Field: sufficient breadth
• Territory: global
• Royalty rates and milestones that will allow for
investors to get good returns
• Use an experienced lawyer

15. 15
What do you do next
• Write a business plan
– Consult with your TTO and agree the approach
– Do your research … all of it … literature / internet / customers
– Tell a succinct but compelling story
– Hone your elevator pitch
– Answer every question on the previous slides (including team)
– Don’t forget all of those risks … or what you will do about them!
• Find advisors
– Technical experts / SAB
– Business advisors / mentors / NEDs
– Lawyers
• Form the company
– But … not every idea needs a company
– Not every company should be formed immediately
Do you need a CDA?
BEG - BORROW - STEAL

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Hone your elevator pitch
• Create a business frame
– What are the (very few) things that you will do?
Everything else is outside of your frame …
Make sure that it stays there!
We ….
By …
So that …

17. 17
Finding investors
• Early / seed investment is probably the most difficult
– Tech Transfer Office
– VCs: sums involved are often too small to get out of bed for
– Smaller regional funds and venture capital trusts
• So … do you really need funding?
– Continue in the University
– Beg – Borrow – Steal
– Self fund
– Friends and family
• Can you find non-dilutive funding?
– Grants: TSB, MRC, Wellcome, EU etc.
– Business plan competitions!
• Angel investors and crowd sourcing
– Beware the long tail

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Finding investors
• Prepare and practice your pitch … the story
– Elevator pitch - ½ hour slot - 1 hour version …
• Not all investors are the same … do your research:
– What are they are looking for?
– At what stage do they invest?
– How much do they invest?
– Who are the people, what expertise do they have?
– What else have they invested in … are they conflicted?
• Not everyone will love your idea … or you
• Iterative process
– Learn from each and every interaction
– Defend your case … but don’t argue … listen!
– If the answer is no … then find out why
– Decide whether you should make changes
Do you fit their “sweet spot”?

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Finding investors
• It can be a very brutal process
• Investors can seem very critical
– They are … it is their job to find the weaknesses and the risks
– Learn from every criticism … each meeting is a free consultation
• Don’t give up too early … you have to kiss a lot of frogs
• The investment process is costly and time consuming
– The dating game
– Term sheets and syndication
– Detailed due diligence: technology, IP, legal, staff, market etc.
– Full legals including disclosure letters and warranties
• You should understand a few important concepts:
– Pre- and post money valuation and dilution
– Share options versus equity; Ords versus Prefs
– Liquidation preferences

20. 20
SmartScience
for SeriousDiseaseSome other
stuff

21. 21
Some other stuff
• This is an iterative process … so iterate
• BUT … you are expected to be constant … so be constant
• Tell a story … BUT never lie … there will be warrantees
• Things will still go wrong … deal with them … AND learn
• Yes, you do need to know the numbers …!
• See the wood … AND the trees
• Don’t be parochial … the world is bigger than the UK / NHS
• Beg – Borrow – Steal … stretch every £ until it screams
• BUT … remember that you are investing and not spending
• Network – Network – Network
• Surround yourself with good people
• Prepare to work harder than you have ever worked before
• Be strong and be fearless … AND enjoy the ride