Giovanni Rizzo, chief of innovation division at Z-Cube, discusses how life sciences start-ups can benefit from accelerator programmes.
Giovanni Rizzo
Start-ups in the life science sector are a source of invaluable innovation, entrepreneurial spirit and ultimately, important developments that could improve patient health. It is through new ideas that the sector can face current and future challenges, such as an ageing population, the need to invest in new-generation, digitalised technology, and a rise in patient demand of service and value for money.[1] But data shows that 90% of all start-ups fail within the first year [2], a worrying statistic considering the wealth of advantages that innovation can bring to the life sciences industry.
One solution for start-ups in need of assistance is to join an accelerator programme. A business accelerator offers funding and access to investment, as well as other types of support, to early-stage start-up companies. Such programmes provide a range of benefits to fledgling companies and promote growth and development in industry.
- Breaking the vicious circle
Funding for life science projects tends to reach established businesses rather than early-stage life science start-ups, yet it is at this early stage that businesses need significant financial support. The global life science sector is set to grow to the value of $447.5 billion by 2020,[3] but with limited access to investment, start-ups tend to go public too early to raise capital. In doing so, they risk undervaluing and placing undue pressures on their business. Accelerators can help to address this vicious circle where start-ups need funding to achieve maturity, but only mature businesses receive funding, by providing new businesses with the finance necessary to build solid foundations.
- Learning business skills
A good idea does not a successful business make. To impress investors and secure funding, early-stage companies must be able to present a detailed business plan and demonstrate understanding of business processes, such as sourcing a reliable supply chain, managing partners, and tax and staffing issues. The research organisation MindMetre recently interviewed UK Private Equity houses and asked them to rate a range of skills in companies they acquire or fund. The survey found that some key business skills such as IT management and marketing are generally sub-par in acquired businesses.[4]
With life-science start-ups often set up by academics - in the UK, 34% of new life science start-ups are University spin-offs [5] - business support is indispensable for would-be entrepreneurs whose expertise lies within their own field of work. Without this support, innovators are prevented from bringing their initiatives to fruition due to a lack of business experience, while firms that have already received funding continue to receive more. Accelerator programmes can help start-ups fill the gaps in their business knowledge, and create fully-fledged companies.
- Gaining access to mentors
Funding can only go so far in creating a successful business. Mentors with the right skills and experience helps to ensure that money is spent wisely and that projects reach their full potential. Before accepting financial support from investors, start-ups should look into what other types of support are made available. A good mentor will be able to anticipate unforeseen problems through their own experiences and provide critical advice. In fact, a recent study found that 33% of founders who are mentored by successful entrepreneurs went on to become top performers. This is more than three times better than the performance of other companies.[6] Start-ups should look out for accelerators that can offer guidance that goes beyond monetary assistance.
- Meeting the right people
Exposure to the right people at the right time is an important factor in ensuring that a business takes off. This is a strong argument in favour of choosing an accelerator that operates in the right sector, so that start-ups can build networks with peers that already understand their field of work, through industry workshops and programmes. In the same way, the right accelerator will expose your business to investors that are a good fit to your business, and may already have an understanding of the regulatory framework and the value placed on R&D in the country where you are based.
Life science accelerators which offer holistic, well-rounded support are the ideal partners for early-stage start-ups within the industry. This year, ZCube, the research venture of the pharmaceutical group Zambon, launched the second edition of Open Accelerator, a fast track acceleration program for life science start-up projects. The 12-step programme provides training to researchers, scientists and entrepreneurs in four main areas: drug delivery systems, open source prototyping, wearables and digital health, and big data.
At the end of the program the most innovative ideas could receive a seed investment of up to €100,000, which will serve as an important catalyst to enter the market. The combination of talent and expertise enable by accelerator programmes such as these is a springboard for exciting new developments within the industry.
[1] PwC, the economic contribution of the UK Life Science industry, March 2017, http://www.abpi.org.uk/our-work/library/industry/Documents/The_economic_contribution_of_the_UK_Life_Sciences_industry.pdf
[2] Forbes, 90% Of Startups Fail: Here's What You Need To Know About The 10%
[3] EP Vantage data
[4] MindMetre Research, Mind the (skills) Gap, June 2015
[5] Life Science Network, Life Science Startups in the UK, 27th December 2016
[6] Techcrunch, Mentors are the secret weapons, March 2015, https://techcrunch.com/2015/03/22/mentors-are-the-secret-weapons-of-successful-startups/