Getting more scientists founding startups will lead to fewer business failures, such as the infamous Theranos collapse, according to CSIRO’s ON accelerator founder David Burt.
Theranos was an ill-fated blood-testing startup founded by Stanford dropout Elizabeth Holmes, which promised to be able to test patients blood for hundreds of things just by using a few drops of blood. The company raised more than $US700 million ($1 billion) from numerous high-profile investors and was valued at $US10 billion at its peak.
However, the company was brought down after it became apparent its claims were false, technology near-useless, and its founders untrustworthy. The SEC in the US charged Holmes for “massive fraud”, and the founder is currently facing criminal charges for wire fraud and conspiracy.
While Holmes pitched her outlandish vision as a path towards changing the world, many scientists and researchers viewed her product with scepticism, convinced it could not possibly work with the level of technology available at the time.
Speaking to StartupSmart, Burt says having more scientists leading companies will reduce cases such as Theranos’, as they have the credibility and expertise to develop their vision.
“I was talking with one of our scientist founders the other day, and he said: ‘If Theranos can raise a billion dollars with science that doesn’t work, imagine what I can do with science that does work’.”
“Plus, anyone who invests in scientist-led startups is inherently facing lower risk. They’re getting the globally celebrated scientist with a 30-year career, not the Stanford drop-out,” he adds.
But scientists’ propensity for founding startups goes beyond their knowledge and expertise, says Burt, with their years of research experience meaning they’re able to better articulate the value of their product to investors, and have an ability to efficiently direct and deploy resources.
“Science has an inherent emphasis on learning, as to be a scientist, you’re effectively a professional learner. So when you think about what’s involved in starting a company, it’s all about learning, there are so many unknowns,” he says.
“The most successful founders are disciplined about what they’re trying to learn and how to go about it, and the nerdy version of that is having a method and a hypothesis, which is infinitely useful for entrepreneurship.”
“Also, everyday founders often start companies to make money, which is not a bad thing, but a scientist will fall in love with the problem and want to discover more about it before even thinking of the financial implications.”
This being said, Burt stresses the ON accelerator is not trying to turn every scientist into a startup founder, only helping the ones who take the initiative themselves to start commercialising their research.
ON was founded by Burt and others at CSIRO in 2015 after they realise there was potential in equipping those who were inventing the tech with the skills they needed to commercialise it, a move he says helped redefine how innovative companies can be founded.
“Instead of cascading money down the hierarchy, we went straight to the bottom, to the research labs starting the hierarchy, and helped those scientists better articulate the value of what they’re working on and give them the support to commercialise it,” he says.
“We pitched that concept to CSIRO got a bit of seed funding, and started out with 10 research teams as an experiment.”
Supported by industry heavyweights such as Bill Bartee and Phil Morle, the 2015 founding team for ON over-delivered, and launched an accelerator program which has processed more than 500 research teams to date, though only a small number of those choose to launch their own startups.
Of that handful, we’ve seen a number of seemingly successful companies. This includes fruit-fly detection company RapidAIM, remote physiotherapy startup Coviu, and IoT startup Ynomia.
While these startups have all managed to raise further funding, Burt says scientist-led startups also typically need less funding than other startups, as they often have all the skills they need in-house.
“If they need to develop something technically difficult, they’ve got the skills, they don’t need to raise money to hire someone who does,” he says.
“Everything they need is already in the team.”
With the Earth currently facing a climate crisis of unprecedented nature, action on renewable energy, conservation, sustainability and preservation is needed now more than ever. A recent report from the UN determined humanity was “eroding the very foundations of economies, livelihoods, food security, health and quality of life worldwide”.
CSIRO and its team of scientists and researchers are well-positioned to help tackle this crisis, and Burt believes the science community “consistently” comes to the party earlier than any other industry.
The ON team encourages startups coming through the program to think bigger than Australia, to set their sights globally and enact change on a massive scale. One such example of a world-changing technology developed by CSIRO is WiFi, and Burt says the team is hopeful for another success on that level.
“What’s great about the WiFi story is that it’s on several billion devices, that sort of distribution is really positive,” he says.
“We’re hoping for a WiFi-level hit, and we’re really looking to maximise that chance.”
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