It’s the U.S. energy capital. It was the home of Enron. And for the most part, those two facts reflect the scope of startups in Houston, Texas. Enron, before it began conducting massive accounting fraud, was innovative in its approach to energy. And thanks [...]]]>

Why You Should Start a Company in… Houston

Cgate Health creates software to provide simple, flexible and cost effective Electronic Health Record (EHR) solutions. Unlike the current landscape of complex, incomplete and expensive Electronic Medical Record (EMR) systems, [...]]]> Houston’s favorite venture capitalists are at it again, funding an Austin/Houston startup company in the very hot bio-informatics industry that marries software and healthcare.

Cgate Health creates software to provide simple, flexible and cost effective Electronic Health Record (EHR) solutions. Unlike the current landscape of complex, incomplete and expensive Electronic Medical Record (EMR) systems, Cgate’s proven software delivers integrated access with a consolidated view of the complete patient record – a gateway to the health record. Healthcare providers and commercial vendors use Cgate’s platform to achieve their goals of productivity, quality and compliance with Federal mandates.

Both CEO Rob Donnelly and CTO Bryan Haardt have a long history of entrepreneurship and startups in Houston between them. Rob was the COO of the Houston Technology Center and later helped found Genesis Park, an early stage venture and private equity investment group. Bryan is no stranger to tech startups, acting as the HTC’s first CTO then going on to become the founder of 10X Labs, a very successful software developer. They are both DFJ Mercury Venture Advisors

The company will be implementing software for the healthcare space via some Fortune 5 (not 500) partners and hopes to fulfill the promise of truly integrated and efficient healthcare system that patients, providers and insurers can use properly.

The Austin Business Journal got some of the facts wrong because they misread a recent SEC filing, since the vehicle for the deal was an old company, but DFJ did make a seven-figure investment in CGate.

Austin Business Journal

CGate Health Inc. closed an $88,200 round of financing.

The Austin-based health records mobile application developer received the capital from a lone investor, according to a Dec. 29 filing with the U.S. Securities and Exchange Commission.

CGate, which was founded earlier this year, is listed as a portfolio company of DFJ Mercury, a Houston-based venture capital firm. DFJ is vested in other Austin tech companies including ActaCell Inc., the developer of lithium ion batteries, and Illumitex Inc., which develops light-emitting diode, or LED, technology.

CGate CEO Robert Donnelly couldn’t be reached for comment.”

We took March off for SXSWi but are back in full swing for the April 2009 Houston Startup Happy Hour this upcoming Thursday, April 2nd from 6:00 – 9:00 p.m. at Saute Bistro at 2303 Richmond Avenue. This will be a dual purpose happy hour in that we are also kicking off BioCamp Houston ’09 [...]]]>

We took March off for SXSWi but are back in full swing for the April 2009 Houston Startup Happy Hour this upcoming Thursday, April 2nd from 6:00 – 9:00 p.m. at Saute Bistro at 2303 Richmond Avenue. This will be a dual purpose happy hour in that we are also kicking off BioCamp Houston ’09 Weekend. The weekend will start with the happy hour Thursday night, move into the 6th Annual BioHouston Chili Cook-off 2009 held by our friends at BioHouston on Friday from 12:00 – 5:00 p.m. and then BioCamp Houston ’09 at Rice University’s Keck Hall from 9:00 a.m. until we close her down. We’ll conclude the weekend at Valhala, Rice’s on campus graduate student pub.

Should be an amazing weekend so all of you researchers, doctoral students, biopreneurs, doctors, Hooters’ waitresses, and other bioenthusiasts come and help make it a weekend to remember.

When you’re pitching to investors, [...]]]> Over the last couple of weeks, I’ve had the chance to see and critique a lot of early-stage company presentations. One criticism that comes up again and again is that scientist-entrepreneurs waste too much time talking about the details of their discovery and not enough time on the business opportunity.

When you’re pitching to investors, don’t spend more than a quarter of the time describing the science.

In one presentation I saw, the title slide was something like, “Inhibition of Protein X by blah blah blah.” I groaned. I knew what was coming. In a ten minute talk, the presenter spent 13 minutes discussing the details of his technology and 2 minutes on the market potential. The scientist felt that it was important for his audience to understand his technology and to convince them that it works.

Scientists, pay attention. Raising money from investors isn’t like raising grant money. When raising grant money, the quality of the science is the whole game. You have to convince the reviewers that your methods are sound and your findings are correct. Reviewers care about the details of your protocols and your publication history. But the reason things work this way is because the only return granting organizations are looking for is more high quality science.

Investors are interested in a different kind of return. They’re interested in economic returns. Thus, in your initial conversations with investors, you’ll find that they’re willing to assume that the science works, in order to dive in on questions of market size, IP protection, and management. As one of the VCs at last week’s Texas Life Science Conference put it, “I’ll spot you the science, now how am I going to make money?”

That’s not to say that investors don’t care at all if the science works or not. They’re just filtering out opportunities in a different order. Due diligence on the technology comes after considering the market potential and the talent of team.

Look, I know that the science is the interesting part. I understand that it’s your life’s work and the most important thing in the world to you. But nobody is going to invest in your idea if you don’t tell them how it’s valuable to them.

Do you need a Ph.D. to be a Biotech Entrepreneur? This seems to be a popular question these days, even though I think the answer is pretty obvious: No.

There are lots of biotech entrepreneurs out there without Ph.Ds. [...]]]> Graham Randall is a regular contributor to Startup Houston on the topics of biotech, life sciences and entrepreneurship.

Do you need a Ph.D. to be a Biotech Entrepreneur? This seems to be a popular question these days, even though I think the answer is pretty obvious: No.

There are lots of biotech entrepreneurs out there without Ph.Ds. What really matters is what role you want to play in your startup company. If you want to found a company and be its lead scientist, then obviously a Ph.D. will be required. Not just for the credential, but because it’ll take you several years to acquire the knowledge necessary to do the kind of research that yields results with commercial potential.

But if your intent is to be the founder and general manager of a biotech company, then the value of a Ph.D. is diminished.

Why would you need a Ph.D.?

The knowledge you gain from earning a Ph.D. will help you evaluate technologies. Even when you’re evaluating technologies that aren’t directly in your field of expertise, the critical and analytical skills you learn in acquiring a Ph.D. will help you quickly get up to speed and start asking the right questions.

You’ll also learn some leadership skills while doing your Ph.D. You’ll gain experience giving lectures and communicating your ideas. You’ll learn how to think on your feet and handle tough questions. And from these experiences, you’ll gain some confidence.

The Ph.D. is also a credential that will allow you to apply for grants on your own. Even so, if you’re not the inventor of your technology, then your partner, the inventor, will probably have a Ph.D.

Why don’t you need a Ph.D.?

If your goal isn’t to be the Chief Scientist of a biotech company, then the 4-7 years you spend in a lab trying to get a Ph.D. would be better spent working at a biotech company gaining practical business experience. Working in a company will not only teach you a lot of technical business skills like finance and accounting, you’ll also be exposed to a variety of management styles, team work, project management, quality assurance, manufacturing, regulatory approval, and sales and marketing. This is the experience you’re probably not going to get in the lab, but it’s crucial to starting a company.

Conclusion

No, I don’t think a Ph.D. is required. Getting a Ph.D. is a personal decision. If you feel passionately about science, or if you have a strong personal compulsion to “phinish”, then go get your Ph.D. But if you think it’s only a means to an end, I think your time is better spent getting real world experience. Maybe even get an MBA (which will be the subject of a future post).

Newt Gingrich recently wrote an editorial in the WSJ [subscription required] calling for greater use of prizes to solve the world’s problems. Regardless of what you think about Newt’s politics, it’s difficult to deny that the current grants-based [...]]]> Graham Randall is a regular contributor to Startup Houston on the topics of biotech, life sciences and entrepreneurship.

Newt Gingrich recently wrote an editorial in the WSJ [subscription required] calling for greater use of prizes to solve the world’s problems. Regardless of what you think about Newt’s politics, it’s difficult to deny that the current grants-based process of funding science isn’t meeting our needs. Grants are too risk-averse and too time-consuming. As a result, the visionary, but risky, experiments that lead to major breakthroughs have difficulty getting funded, and many future scientists are turned off by the prospect of spending a career writing grant applications. The success of the first X-Prize shows that prizes can work and can be much more cost-effective than the grants system.

Gates Dissatisfied With the Conduct of Science

Derek Lowe commented a while back on the dissatisfaction of the Bill & Melinda Gates foundation with the results of their Grand Challenges. These were grants awarded in 2005 to researchers to try to solve the biggest public health problems. Unfortunately, these grants produced no major scientific breakthroughs. So, the Gates Foundation is reissuing the grants, but this time ignoring the so-called “experts” and looking to other fields for ideas.

Derek isn’t surprised that the grants produced no results since the practice of science is so unpredictable. You can’t do science the same way you would build an operating system–set some deadlines, allocate resources, and draw up a Gantt chart.

Still, I’m not certain that the conduct of science wouldn’t benefit from somebody like Bill Gates throwing some money around and imposing some discipline. Science, and in particular academic science, is woefully inefficient. Part of this is because in academia, the worker bees (graduate students) are still learning their craft. But it’s also because, having accepted that science is unpredictable, hardly anyone puts any thought into managing the project. Few scientists even have training in project management. Experiments get done when they get done, and then the scientists move on to the next experiment. Science, today, is too much like a drunk man’s stagger.

What is generally missing is a project manager–someone to drive the schedule and hold the team accountable for meeting deadlines. By deadlines, I’m not suggesting “cure cancer by the end of the semester.” I’m thinking of shorter-term, measurable goals. What can be accomplished this week, this month, and this semester, and how do the results contribute to the ultimate goal? Nobody’s keeping an eye on these little details in an academic lab. Days turn into months which turn into semesters. Graduate students bang their heads against walls pursuing deadends because nobody set a deadline for pulling the plug.

All of this is allowed to go on in academic science because the focus is on the proposals and the subsequent publications, not the actual, real-world-affecting results. Come review time, anybody can say “Look at how productive we were, we published all these articles!” What Gates is realizing is that publications don’t cure diseases.

Prizes would bring the focus back to results–real-world-affecting results.

Gingrich’s Prizes

In Newt’s article, he suggest seven prizes with $2 billion awards for accomplishing the first three and $1 billion for the rest:

1) A low-cost vaccine or preventive intervention for malaria — possibly the single biggest potential improvement in the quality of life in poor tropical countries.

2) A modestly priced, mass-manufacturable hydrogen engine for cars, which would be the biggest single contribution to reducing carbon loading of the atmosphere and reducing subsidies through high oil prices to dictatorships.

3) A cheap method for turning large quantities of seawater into fresh water.

4) A reusable system that could get people into space at 10% of the current cost, thus enabling genuine space tourism and launching an age of exploration.

5) The first privately financed permanent lunar base.

6) A method for reusing nuclear waste to make Yucca Mountain, Nevada unnecessary as a repository.

7) A method of learning math and science that kids like, and that enables us to leapfrog India and China by breaking out of our unionized, bureaucratic curriculum. This would enable us to replace “No Child Left Behind” with a more effective education model that could be called “Every American Gets Ahead.”

This is a good starting point for further discussion, and I’m sure everybody has their own pet cause they believe is worthy of the list. I’d rather see more prizes for addressing disease. I also think Newt’s prizes are too big. There’s no doubt that the person who invents a mass-manufacturable hydrogen engine will make a lot of money just by licensing the technology to automobile manufacturers. So does that challenge also merit a $2 billion award? For $10 million, the X-Prize found a solution to fly us into space, so why should we spend $1 billion to reduce the cost of that trip by 10%?

We should differentiate between the two uses for prizes:

1. Spur innovation in a potential commercial market. Compel innovators and entrepreneurs to take the next step to commercialize the technology.
2. Incentivize innovators to develop solutions to problems for which there is no significant ROI. The mainly applies to orphan diseases, like malaria.

and then adjust the size of the prizes accordingly. Curing orphan diseases is going to require big prizes, but prizes designed to spur innovation in a potential commercial market should be just large enough to motivate people to get started–like the $10 million offered for the X-Prize.

So what do you all think? What causes do you think merit prizes? How big should those prizes be? Please leave your ideas in the comments.

The Houston area is emerging as a center for the life sciences industry. Numerous start-up companies have emerged in pharmaceuticals, biotechnology, medical devices, and telemedicine. This is generating a demand for leaders with a background in both entrepreneurship and the life sciences. To educate these leaders, Rice University Executive Education, the Rice Alliance for Technology and Entrepreneurship, and [...]]]>

The Houston area is emerging as a center for the life sciences industry. Numerous start-up companies have emerged in pharmaceuticals, biotechnology, medical devices, and telemedicine. This is generating a demand for leaders with a background in both entrepreneurship and the life sciences. To educate these leaders, Rice University Executive Education, the Rice Alliance for Technology and Entrepreneurship, and BioHouston have collaborated to offer the Life Sciences Entrepreneurial Management Certificate. Participants will learn about market opportunities, intellectual property issues, life science business plans, sources of funding, and the successful launch and management of a life science start-up.

Registration:
General Registrants ($995)–Register Online
Members of Houston Academic Institutions ($500)–To register, please contact the Registrar at 713-348-6060