Early stage life science companies face a daunting number of hurdles as they try to build great teams with the right leadership and capabilities to accelerate growth and hit key milestones.
It’s not as easy as it sounds, agreed a panel of venture capitalists and entrepreneurs during a discussion on team building at the Michigan Growth Capital Symposium on May 17.
“When I started as a VC, I was focused on the cool technology,” said Jim Adox, managing director at Venture Investors. “Now I’m focused on the people, and then I work down to the market and finally, the technology.”
“In the world of startups, I bet on the team and the leadership,” commented Mike Blue, president and CEO of HistoSonics. “If we have that, we can figure out the technology.”
The panelists weighed in on best practices and common pitfalls they’ve encountered during their careers as venture investors, company founders or startup CEOs.
Hire good startup employees
“I look for grit, and the intelligence and perseverance to go with it,” remarked Sundu Brahmasandra, president of NeuMoDx Molecular. “Identifying and evaluating those qualities in a job interview is not easy, however.”
“In small companies, everyone must fulfill multiple roles,” said Clay Thorp, general partner at Hatteras Venture Partners. “So we want the learn-it-all people who can acquire new skills ─ not the know-it-all people.”
Seek out experienced leaders
“Repeat entrepreneurs are like gold,” Adox noted. “Data show that they know how to bring teams together and work with venture capitalists.”
“The cornerstone of the team is trust, and a leader has to earn it,” Blue remarked.
“Finding a superhero is wonderful,” Thorp added. “You have to be careful, however, because over the long-term, that person may wind their way out because they are not up to the task.”
Assess performance and make leadership changes
“Nobody is indispensable,” Thorp insisted. “VCs get a bad rap for being ‘Chainsaw Al’ when they fire a startup CEO. It’s the worst part of our job. But when I look at failures, it has been because we let someone stay in the company too long as CEO. We should have made the break sooner.”
“It’s all about fit,” Blue said. “A great person and a great job may not be a good fit. Ask yourself if this is the right person for the job at this particular time. The longer you take to decide, the more time you waste.”
“If a person brings domain expertise to the team, I try to be patient because that expertise is hard to lose,” Brahmasandra explained. “If it is an execution-type position, such as sales and marketing, the decision tends to be quicker and we move on. This drives the rest of the team to a higher standard.”
Raise smart capital
“Startups are in a race against insolvency,” Adox said. “As investors, we tranche our financing because we need to see progress.”
“The time to exit has gotten longer, and the goalpost is definitely farther out,” Thorp observed. “Investors have gotten more selective in the med-tech sector and are not buying on the idea, but rather, on the revenue number. The market opportunity must be right.”