QB3 Startup in a Box

QB3 Startup in a Box. Unpack it and turn your idea into a well-structured life science company with financing.

The typical university spinout will not begin life with an expert team and a devoted venture capitalist. Instead, such companies are started by scientists-turned-entrepreneurs—often with no more funding than a credit card.

We used to think that in the life sciences such modest resources would necessarily predict failure. But time and again these entrepreneurs have proved us wrong. Look at Refactored Materials. Two graduate students without any commercial experience moved into the QB3 Garage with little more than an idea. A year later, they have entertained several proposals from Silicon Valley venture capital. Without the help of the QB3 Garage it is not at all clear that the startup would have fledged. While this system worked in this case, how many more companies could we create if we had a well organized set of resources to help UCSF, UC Berkeley, and UC Santa Cruz researchers build compelling business plans, form well-structured companies, file SBIR grant applications, and begin operations in the most efficient way? This is exactly the goal of QB3’s new program, QB3 Startup in a Box.

QB3 is dedicated to helping our creative entrepreneurs launch successful startups. We want to make the whole process more efficient: easier to conceive, create, experiment, and grow. As we find barriers, we want to lower them. This is an iterative process—find an obstacle, implement creative solutions, repeat. For instance, space. Unlike tech companies, bioscience companies can’t turn a laptop and table at Starbucks into their first home. They need a tiny amount of lab space and access to specialized equipment—equipment often worth millions of dollars. This is what the QB3 Garage network has done. Now, at a cost that even graduate students can afford, they can make their company operational. They can begin risk reducing experiments and gathering the team they’ll need—all within a stone’s throw of the university. Lowering this barrier has been a huge help to these companies—the QB3 Garage/Innovation Network is now home to 43 companies.

However, we’ve identified a new hurdle—starting. Often entrepreneurs, particularly busy faculty, will get to a promising point where their research has commercial potential. They’ll come to our office with a cool idea, but without a clue about how they can go about starting a company that could turn this idea into a well functioning company. It’s not as if the steps are that hard, but they are foreign and there are real risks associated with making mistakes. They need guides they can trust. Often there is considerable urgency to getting this done. For instance, a logical first step for turning the idea into a company is an SBIR application. SBIRs are frequently the funds that bring the company to life, and are nearly always part of a successful “lean biotech startup” strategy. But one has to have a company registered with grants.gov 30 days prior to the SBIR deadline. If our conversation is 45 days out from an application deadline, we have to be able to snap into action.

QB3 wants to solve this problem by creating a new program we’re calling Startup in a Box. The goal is give founders everything they need to create a well-structured company. These services will include:

QB3 Startup in a Box Services

• Legal Assistance in Company Creation: These services will be provided by QB3 Startup in a Box legal partners. They will provide the company these services at no charge (this is required for QB3 to represent these services to the startup), and the company will not be obligated to continue to use the law firm’s services. However, QB3 hopes that the law firm will supply excellent services and the company will naturally want to continue the relationship. The startup will be responsible for filing fees. Startups will be cycled in order through our partner firms.
  • Incorporation
  • Help in agreeing on a pre-funding cap-table
  • A set of standard documents (NDAs, employment agreements, etc.)
  • Preliminary review of IP position including a letter of intent for an exclusive license with the university if necessary

• Mentorship: QB3 has developed a rich network of mentors to help companies create a business plan that includes clarity about the best market to serve, the needs of their customers, the capital required, and the most significant risks that will need to be addressed. These mentors include:
  • QB3’s Clinical Associates—leading UCSF clinicians willing to help entrepreneurs evaluate the most important unmet medical need
  • QB3 Mentor Network—leading biotech experts willing to help entrepreneurs think through the startup’s business model, personnel requirements, and capital needs
  • QB3 Intern program. We have a large network of graduate students and post-docs seeking to gain business experience. These folks provide excellent analytic support for the startups and their mentors. They pull the patents, competitor information, and publications to inform the business model analysis
  • QB3 InnoLab team of professionals has gained considerable expertise in managing university policies ranging from conflict of interest through to licensing intellectual property

• Business Bank Account: In order to apply for an SBIR grant the company must be registered with grants.gov. This requires a bank account. Silicon Valley Bank has agreed to provide the QB3 Startup in a Box companies with a no-deposit and no-fee account for this purpose.

• SBIR/STTR Application Assistance: The SBIR mechanism contains its own arcane tricks. QB3 will help the company get this important funding. We will engage professional SBIR grant writers to advise the company on the application process, the best specific aims for the company’s application, and the right agency and study section to submit the application to. QB3 may also provide modest funding on a contingency to companies that would like to retain these writers for more in-depth editorial support.

• Operational Checklists: QB3 has assembled a series of checklists to help guide companies from conception through successful operations in the Garage. These checklists reduce the time and risk in putting the myriad pieces in place: from registering your company through to finding used equipment.

Together these services will efficiently guide a set of founders through the maze they must traverse to turn their idea into a company. And more importantly it will help ensure that this company is ready to succeed. This program will get the startup to a position where it has a clear commercial vision, can file an SBIR, take a lease for space, hire an employee, and speak with consultants.

Candidates for the QB3 Startup in a Box program will apply to QB3 and will be judged upon the commercial potential of the project and the dedication of the entrepreneurs. We will advise the applicant within one week regarding acceptance into the program, and will be able to prepare a company to a position where it can apply for an SBIR grant within one month.

Drawing from the UCSF, UC Berkeley, and UC Santa Cruz communities, we expect to be able to bring 15 to 25 companies forward a year—if not more. Given an expected success rate of SBIR applications of 25%, this will result in at least 4 new companies a year and, given our experience, we actually expect quite a few more.