By Tom Henderson
Small Times Senior Writer
COLUMBUS, Ohio, Sept. 27, 2001 – When Scott Mize spoke at one of the opening workshops of the BioMEMS and Biomedical Nanotechnology World 2001 conference here this week, he had a room of eager listeners.
The workshop was on how to find funding for startup or fledgling small tech companies, and a standing-room crowd of would be entrepreneurs were eager to hear how to begin commercializing their research.
Mize’s nanotech startup, called NanoVision Inc. but about to undergo a name change, holds its closing this week for a seed round of funding that will allow it to hire a staff, open an office in California’s Napa Valley and develop into a market-ready device what is now a prototype camera that films in nanometer-scale resolution.
Mize was part of a three-person panel that included a venture capitalist and an angel investor, and the full room at the Columbus Hilton was happy to find out that deals were still being done, despite all the recent turmoil in the market and crashing stock indexes.
The first chapter of Mize’s startup had a happy ending because it ended in funding. The camera’s inventor, Lev Dulman, had toiled away in his garage for seven years before finding a partner to help commercialize his invention.
“What got me the most is this guy did it in his garage, and I thought the days of inventing something in the garage in Silicon Valley were long over,” said Mize.
Mize has a 20-year track record in information technology and growing and selling businesses. Last year, the camera’s inventor, Lev Dulman, approached him about helping him commercialize his invention.
“I was looking to get involved in new venture, and in nanotech,” said Mize. “It had to be something that would have a huge impact, that was a fundamental breakthrough, a cliché I shouldn’t use.”
Mize visited the garage and saw the prototype camera in action. From January through May of this year, he served as a consultant, and began studying the market and potential applications, getting input from venture capitalists he knew.
In June, he officially joined the company as president and chief executive, and began the hunt for seed money. In August, he signed a term sheet with a group of angel investors and what he describes as a major San Francisco venture capital firm. He declined to name the investors.
Mize said that NanoVision’s technology films at nanoscale resolutions in real time in all three dimensions, is nondestructive to the sample and works in an ambient environment, meaning it can be placed in the manufacturing process as a monitoring tool.
He said the markets for the camera include nanomaterials, biomaterials and the semiconductor industry.
“The market size is easily in the billions. I don’t think it would be too far a stretch to go into the several tens of billions. We’ll enable new markets that don’t exist, and that’s hard to quantify,” he said.
Mize is also chairman of the advisory board for a report on near-term business opportunities in nanotech called “The Nanotechnology Opportunity Report,” sponsored by Niehaus Ryan Wong Inc., a San Francisco marketing firm. Originally due out in October, it is probably going to be delayed until December, said Mize.
SURVIVAL TIPS FOR THE MONEY TRAIL
One of the conference’s first workshops was titled Commercializing BioMEMS and Biomedical Nanotechnology, and was a primer for scientists, researchers and engineers who were budding or would-be entrepreneurs.
The panelists gave a broad perspective on how to get startup and early-round funding.
Allan May is chairman of the investment screening committee of Tenex Medical Investors, a Silicon Valley-based organization of so-called angel investors. Angels are high-net-worth individuals who generally fund seed rounds to get a company up and running to the point where it can seek larger amounts of money from venture capitalists.
John Ryan is with J.P. Morgan Partners, a VC firm based in San Francisco. Ryan focuses on biomedical and nanotechnology companies.
The third panelist was Scott Mize, who had his own recent success story to use as a case study in how to get funding.
Here are some of their tips:
- “Have you done your homework? Is there a real market need?” asked Ryan. When you meet with a would-be investor, be ready to tell him or her all about the competition, the market niche and size, and how your idea gives you a commercial edge.
- Before seeking professional investment help, invest your own money and get friends and family to invest some of theirs. “It’s called skin in the game,” said May. “Investors love to see that – that you like your idea enough that you get your friends and family to invest in it.”
- Network. Many venture capitalists say they welcome cold calls via phone, e-mail or snail mail, but Ryan said that a would-be entrepreneur has a much better chance if he or she can get a foot in the door by referral.
- Use the Web. “Do a search and type in ‘angel investors’ and you’ll get hundreds of hits,” said May. Do a Web search for venture capitalists, too. The National Venture Capital Association has a useful Web site that lists more than 400 VC members. Another site, vfinance.com, has a directory of 22,125 angels and 1,664 VC firms.
- Don’t seek VC money too fast, or too much. Try to build as much value as possible in a company through concept refinement, R&D, prototyping, proof of concept and developing a business plan business plan. The farther along you are in building your business before venture capital invests, the less the entrepreneur’s value is diluted.
- Tangibles are better than concepts. Mize said his search for funding was short because the inventor had a real prototype.
- Technology alone doesn’t mean as much to the money people as it does to scientists. “This room is probably full of people who think if they lay out a cool technology in front of investors, they’re going to get money. That’s not the way it works. The streets of Silicon Valley are paved with cool technologies that never developed,” said May.
- Be prepared to move your young company. Many VCs want their investments nearby. They are hands-on and don’t want to spend a lot of time traveling.
- Learn to take risks. “Most scientists aren’t trained to take risks. They’re taught to be methodical. That’s not how you succeed in business,” said May. “In business, you have to take risks. That’s why reward is proportional – the bigger the risks, the bigger the rewards.”
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CONTACT THE AUTHOR:
Tom Henderson at [email protected] or call 734-528-6292.