There are four main concerns that are important for getting a startup company on the road to success.These are that the Startup have a unique solution to a problem, that the founders have a target market, that the company have an entrepreneur and a management team with business experience, and that the company have funding to achieve their first milestones.
• Problem and Solution
A cool technology is not enough to start a business; rather, the technology needs to answer a problem and the solution needs to be better than other solutions which are currently offered in the marketplace. For example, when Facebook was developed there were already many social networking sites. However, Facebook was different. It was developed in a university setting where users felt comfortable revealing their identities. This made it easier to find friends, which gave Facebook a unique advantage over the other sites. Once Facebook had large numbers of users, it could compete with other sites. (Dinesh Ganesarajah, Kellogg School of Management)
• Market
If the founders or CEO of a business hope to eventually attract angel and venture money, they need to consider the size of their market. It needs to be large enough to supply returns for these investors. Alternatively, the founders can bootstrap or rely on their own funds or revenue to move the business forward.
• Management Team-Led by an Entrepreneur
While university startups are often initiated by the inventor, an inventor often lacks the business experience to take the technology forward as a commercial product. It generally takes a management team that is led by an experienced entrepreneur. An entrepreneur is defined as the owner or manager of a business enterprise who by risk and initiative attempts to make a profit (Collins English Dictionary, 2009). A serial entrepreneur is the best. This is someone who has started up a company previously and has more experience understanding the market, has more important connections with other entrepreneurs and with investors, and is willing to take a risk.
• Funding
Startup and seed funding is essential for the new company. In order to move forward with the new business, the founder or CEO will need capital to meet milestones in the development of the product and to launch his/her business. The company can bootstrap, depending on friends and family, the founders’ money, or services to provide capital. Some entrepreneurs start a business part-time. However, this can send a red flag to investors that the founders are not serious about the venture. Early startups are not able to procure bank loans and venture capitalists often prefer more mature companies.
Fortunately in the State of Maryland there is seed funding for startups. TEDCO’s TechStart program will provide up to $15,000 to fund Maryland university-based or federal lab-based teams, entrepreneur, inventor, and tech transfer managers, to determine whether specific technologies would have the potential to be commercialized through a startup company. These funds could be used for such things as a freedom to operate analysis or a market analysis. TEDCO has further funding for the startups.
The Maryland Technology Transfer and Commercialization Fund (MTTCF), offers up to $75,000 to Maryland companies for developing technology in conjunction with a Maryland university or Federal lab or to a company in a Maryland incubator, while the Working Capital Loan Fund (WCLF) offers low interest loans of between $15,000 to $50,000 to qualified early-stage companies in the State of Maryland to assist with expansion, market entry, or product launch. Other funds exist in the State for further funding such as the Maryland Industrial Partnership Program (MIPS), Maryland Biotechnology Center awards, Maryland Department of Business and Economic Development (DBED) Challenge and Enterprise programs, and the Federal Small Business Innovative Research (SBIR) awards, and Federal and State tax credits.