Reading :: Launching from the lab

 Launching from the Lab: Building a Deep-Tech Startup

By Lita Nelsen, Maureen Stancik Boyce, and Sophie Hagerty 

I’ve read many practitioner-oriented books on launching startups, books that mainly focus on customer discovery and pitching. This book is different. It focuses on deep-tech startups, “new companies developing groundbreaking science and technology into new products, often for new markets” (p.1). For that reason, it seems mainly pitched to IP owners who are considering commercializing their technologies — especially PhDs and graduate students working in a university research environment. For that reason, it is very light on customer discovery, instead emphasizing intellectual property (Ch.3), licensing patents (Ch.4), creating equity (Ch.6), building the company (Ch.7), financial modeling (Ch.9), raising capital (Ch.10-12), negotiating with investors (Ch.13), and exiting the company (Ch.14). Yes, it also covers business models (Ch.2, 5) and pitch decks (Ch.8), but the main focus is explaining business details to sci/tech researchers. This is an important niche, and if I were starting a startup, I would be consulting this book often.

Not only is the book important, it’s very accessible. The authors have advised many startups, and they dip into this deep well of expertise to illustrate their points. I really appreciated how they described the thorny details — especially financial modeling, which I know from interviews is a real concern among sci/tech researchers — and walked readers through them. 

I also appreciated how they examined the motivations for becoming an entrepreneur: “If your only motive is to get rich, it’s probably a losing ambition” (p.5). 

I’m fairly well versed in how startups ideate, develop business models, try out MVPs through the build-measure-learn loop, and pitch. But I learned a lot about other topics. 

For instance, their explainer on founder equity (p.95) was valuable for understanding how founders must strategize their equity holdings. 

Similarly, the authors clearly discuss financial projections (p.137), whose “assumptions will become more accurate” over time (p.139), and they note that “for many research-based emerging technologies, a decade or more may pass before the first product is ready for full release and commercialization” (p.142). 

They also clearly describe the difference between dilutive capital (in which the founder gives equity to the investor) and nondilutive capital (in which they don’t — think in terms of financing and loans, such as SBIR/STTR, I-Corps, tax incentives, and academic incubators) (p.154). They discuss how to get advice from volunteer mentors and business plan competitions, and they wisely warn against “bad apples” such as predatory advisors who demand equity (pp.160-161). They describe various mechanisms for raising capital such as SAFEs and notes, equity rounds, lead investors, and syndicates of investors involved in a given round (Ch.11). And they list stages of fundraising, from initial friends-and-family funding to preseed, seed, series funding, down rounds, the round before an IPO, and mezzanine rounds (pp.179-182). They also emphasize selling to people who share your vision (p.188).

Overall, I learned a lot from this book. It would make a great companion to my upcoming book on entrepreneurship communication, since both books cover early-stage startups, but are nearly orthogonal in terms of what topics they cover. If you’re interested in how startups work, or you want to start your own startup, definitely check it out.