[ABOVE: John Warner and Brian McSharry ]
It might seem like a no-brainer to commercialize a product that’s 20 times cheaper than a competitor’s, but Clemson Bioengineering Associate Professor Delphine Dean says her research could just as well languish on the shelf.
“I’m an expert in my field and I’m a great engineer and researcher,” wrote the MIT Ph.D. graduate in an email from her sabbatical in England. “What I am not is a business leader, and I really don’t know what the steps are to successfully commercialize a product.”
Her research—a diabetes test strip that costs a nickel, 95 cents cheaper than the market leader—doesn’t simply lack seed funding, it lacks business acumen, said previous Sage Automotive Interiors COO Brian McSharry.
“The easy path is to take an idea that a researcher has and license it to big pharma or a big chemical company or something similar,” he said. “The hard part is to take an idea that really needs a business built around it and go from there.”
Enter Concepts to Companies, a “startup factory” that offers early in- vestment and business development expertise to university research startups, said McSharry, a cofounder with business partner John Warner.
The investment firm takes aim at the state’s problem with early-stage capital investment and entrepreneur mentor- ship as well as access to business de- velopment resources, said Warner, an Upstate entrepreneur who cofounded angel investment fund Capital Insight.
All have been a problem for startups in the state since existing investment groups prefer to back startups that already have business plans and revenue streams, Warner said. “They say, ‘Call me back when you have some success to show.’”
Warner said raising $1 million for Concepts to Companies—which, as a startup, required seed capital for itself—demonstrated the difficulty other entrepreneurs face when trying to get their ideas off the ground in the Southeast. “Getting from an idea to there is the problem,” he said.
Investors may not want to invest in startups because of their high failure rate, said McSharry. Concepts to Companies plans to minimize the risk by building a diverse portfolio of several startups based on the idea that while you “can’t pick a winner,” the success of just one or two can more than offset losses. The company currently has two portfolio companies, both of which will receive incremental investments that will hopefully allow them to realize as early as possible which companies will make it and which won’t, he said.
The company’s portfolio currently includes Dean’s company—Accessible Diagnostics—as well as Recovr, which develops therapist-designed rehabil- itation exercises that help patients through interactive games. Recovr was also born out of Clemson University research, but has made it through The Iron Yard accelerator program, is a South Carolina Research Authority company and is funded in part by National Institute of Health grants, said Recovr cofounder and COO Larry Hodges, also a Clemson professor.
“A lot of other companies want to wait until you’re further along,” Hodges said, and he’s found it difficult to raise early capital despite winning pitch and business contests, grants and other accolades. Concepts to Companies represents an “earlier in- vestor than a lot of these other guys who might be hedging their bets for another year or so,” he said.
The challenge for Concepts to Com- panies going forward will be finding funding for subsequent rounds. The company’s existing portfolio—which McSharry hopes to expand to between five and seven companies by the end of 2016—needs to show progress in order for both previous and potential investors to want to put in more.
“We’ve got to have some wins,” he said.