.: BioCatalyst

Frequent Misunderstandings in the Commercialization of Science and Start Ups:

Startup Issue:

Why the need for a startup business partner?

BioCat Solution:

The driving force behind a startup is the market, not the technology. The market and customer needs must be the guiding beacon. The business partner will research the market and competition thoroughly and position the new product and service properly.

Startup Issue:

Does BioCatalyst invest cash in the early stage companies which it helps to create?

BioCat Solution:

BioCatalyst will invest its expertise and cash in the companies it helps create with the scientific founders. We are a market driven operating team and not an investment firm.

Startup Issue:

What should the startup plan include?

BioCat Solution:

Startup plans are based on several critical elements:

1.	The market need including size, product development, competitive advantage and patent position.
2.	Management and scientific experience and past successes.
3.	Market research summarizing reaction of potential customers.
4.	Identify key initial customers.
5.	Product development milestones organized by time and expense if the product is not fully validated.
6.	Future financing's based on critical milestone achievement.
7.	Full, in-depth sales and marketing plan.
8.	Future management and personnel needs.
9.	Revenue projections.
10.	Five year revenue, expense and profit projections.

The above 10 items, are the focus of BioCatalyst's participation.

Startup Issue:

Who will provide the seed capital for the new venture and how far will this get the company?

BioCat Solution:

BioCatalyst will invest seed capital for selected early stage companies. BioCatalyst will work with the scientific founders to access additional sources of capital for future financing rounds. This will generally follow an 18 month seed development phase of the company.

Startup Issue:

There is no start up capital anymore.

BioCat Solution:

Not correct. There is a lot of start up capital available (alternative investment funds); it is just that the sources have changed. Since the early days of venture capital (1970-1990), individual venture capital funds have increased from $25M - $50M to greater than $300M today. Venture funds can no longer afford to spend time with $1M - $2M investments. They will wait for a later stage round and invest at least $5M.

Secondly, early stage or seed investors are very sophisticated and understand the risks. One's plan has to incorporate the highest quality of scientific involvement plus knowledge and experience in the business side of the startup process. It is difficult to raise seed capital if the experience or reputation of the science and business partners is not strong. It is almost impossible to raise start up funds based solely on the scientific half of the equation.

Early stage or seed funds are available from sources other than venture capital although there remains a handful of VC's interested in start ups.

Startup Issue:

We are not ready for sales/business support because we have not completed our product development.

BioCat Solution:

The single, greatest mistake made in the start up process is waiting too long to understand the market, the competition and what your customers need in a new product. Business and market data must integrated with the product development process from the beginning not at the tail-end when it is too late.

Startup Issue:

I do not understand how value is established and how I can create net worth with my founders' stock.

BioCat Solution:

Creating value is a major objective of developing a sustainable start up and it is the only basis on which future financial needs can be met.

Customers are the king of the entire process. It is the customer who needs your product and will create revenues and profits. Over time, value is enhanced by the reaction of the market and the ability to create revenues.

The knowledge and discipline of entering a market is quite different from the scientific effort of product development. The sooner the market development work is undertaken, the greater the chances of success for the new venture.

Value is established by the market which will accept or reject the value you place on the new company.

Increased value is established at the point one raises new equity. The major influences on values are:

1.	The size of the market and the demonstration of the market need.
2.	The quality/uniqueness of the science.
3.	Market penetration and acceptance via revenues.