NanoGene Technologies was a very interesting case in the fact that it looked at the business before the inception and into its first major issues. Taking a look at the companies history is very important when developing the issues involved with this case study. NanoGene Technologies is a life sciences start-up based on nanotechnology, focusing on a set of technologies that link commercial applications of nanotechnology with advances in genomics. One technique that had been developed to accomplish this relied upon isolating the specific genes responsible for a disease, and then testing individual patients to see if they carried those genes.
In November 2001 NanoGene was incorporated and the founders were getting things rolling. The founders consisted of a group of 5, which was very uncommon for a start-up in this industry, Will Tompkins CEO of NanoGene, Mark Masterson (senior scientist), Ravi Rhoota (scientist), Gary Garfield, Don Rupert (head of AMSL). These 5 gentlemen all had worked together at their previous job, Eastern Institute of Technology’s Advanced Materials Science Lab (AMSL). The first round of investing was sealed on June 2002 when the founders acquired $600,000 at a $2. 25 million dollar post-money valuation; 20% immediately, 20% at the end of the first year, and the remaining 60% at the rate of 2% per month.
Next on the plate are a series of issues that must be addressed with close detail to ensure NanoGene’s success. Bringing us back to the issues on hand, we have a few that need developing, first is the companies culture and hiring practices. In the start-up stage of any business you have to realize your going to need employees to help you succeed, now hiring the right employee is a key factor in the success.
Bringing in someone who does not mesh well with the team on board already could hinder advancements within the company and also have a major effect on the company’s culture and how they conduct business in the future. Hiring practices are unique to each company in that every place has something different to offer, in the case with NanoGene the founders are trying to establish fair hiring practices so that no employee feels he/she will or is being diminished, not treated fairly, and not given the opportunity for growth within the company.
Second is Series A funding, which consists of acquiring $10 million dollars for 18 months operating expenses, this would allow the team to first perfect the technology then prove it could work on a commercial scale. Third is acquiring the intellectual property, there were five key patents that were needed for NanoGene’s success. These patents included four in Mark Masterson’s name but owned by EIT that covered most of the key technology, and one other in Ravi Rhotta’s named also owned by EIT. These issues all fall under one key issue, getting someone in that has experience, know how, ability to, and the want to fix these issues.
Paige Miller is a biotech industry consultant who Tompkins had come into contact with through some of their mutual venture capitalists. This sparked many meetings between the two that in turn lead to Miller being brought on board PRE series A financing as a consultant. Miller, a very well educated women studied at UCLA where she received her Bachelors of Science, Business Administration, after leaving UCLA she worked a few years in the San Francisco area at a tennis house where she would trade court time for back office work.
In 1993 she headed to Harvard where she received her MBA, after leaving Harvard she worked for Intel corp. as a research project consultant but only for a short period of time before heading to Biomolecular Technologies where she held many different job titles from manufacturing analyst, internal consultant, to VP of manufacturing by the time she had left in 2001. Biomolecular gave Miller the skills required to jump on board of a, PRE series A financing, company with little to no managerial skills.
From the time of her leaving Biomolecular technologies in 2001 she conducted consultaing work for clients throughout the greater Boston area including several other biotech start-up firms. Tompkins and his co-founders realized very early on that they had little to no experience in starting a company let alone running the daily operations of one. They needed someone with experience; the founders were very fond of Miller and what she was bringing to the table.
Miller had stated that she would need to make $175,000 in salary and have 3% equity post series A financing. This was industry average for a VP of manufacturing with some variations $160,00-$190,000 and a 2%-4% equity. This means she will be making almost twice as much as the founders and have nearly the same equity without having a stick in the fire so to speak. Bringing in Miller, lets look at the facts. The five founders were all scientists at AMSL where NanoGene was “thought” of or “born”, this is a life science company similar to NanoGenes structure.
Coming from a career in an exploration industry where going off on a tangent to find an answer to a problem that was never known is not who you want running any business. The team new they had to bring someone in and this was Miller, Tompkins was appointed to CEO from his four other founders on the basis that he exuded natural leadership and he already had contacts with VC’s and with a law firm and had already learned much more than any of us about what it took to stat a company.
Tompkins brought few managerial and business savvy skills to the table and wanted miller to step in to take the reigns. Miller needed to get in and start structuring this business so it would be successful. She had to adjust a lot of things with in the business, first the founders salary’s were to high for the industry along with many of the other payroll items they had come up with such as scientists pay and equity distribution, hiring practices, goal setting just to name a few.
Miller also brings many contacts throughout the biotech industry that in the future could help with the growth of NanoGene. Miller brings to the table so many skills that are needed to make this company run smoothly that the founders are going to have to give up a little bit of their pie to make it sweeter in the end. I believe you could “shop” around for other candidates for the VP job but that’s not always a good thing.
Lets think, Miller is already involved with the business from a consulting standpoint and has the upper hand on any other candidates because she knows NanoGene. Also Miller has a fresh look at things coming in at such a young age for the VP spot sets her apart from others because she is willing to put in the time and effort to be successful. I would also wiggle her down on the price of her salary offering her options such as $150,000 3 years $165,000 2 years $175,000 final along with starting at 1. 75% equity and inflating that along with the salary over the next six years.