Duke The Fuqua School of Business
Duke Entrepreneurship Education Series
November 5, 2009
Financing 101
Rich, currently is the CEO of Advanced Liquid Logic, which is actually his third start-up company where he served as the CEO. Advanced Liquid Logic, the technology comes from a Duke spinout and it’s exploiting a novel microfluidics technology that the company is applying to medical diagnostics and other markets.
It’s a very interesting thing. They are taking the concept of a lab on a chip with a big monster-type of machine and putting it on a lab on a chip that you can fit in your pocket. It really is just a small-type of component that you can carry around basically.
This is interesting for us and specifically for this talk for Financing because Rich, with this company, has raised over $25 million without any type of traditional VC funding involved. But before Advanced Liquid Logic, Rich was the founder and CEO of TriVirix, which is a medical equipment contract manufacturer. Again, also a lot of great things going on in the financial side, with Rich there where he raised over $40 million in private capital and completed three different acquisitions. But it all started when he was here, back at Duke and he completed his Engineering degree. He would go on and spend 15 years in aerospace industry and even serving for four years as a commissioned officer in the US Air Force.
An interesting link that, sort of a funny tidbit, I realized when speaking with Rich was that while he was working in aerospace, he worked on a missile, that 202 Bravo that I have actually fired from, when I served during my time in the military.
We will not talk about any missiles or things like that tonight, but we will have Rich come up and we will get some good information that might be able to help you with your start-up company and getting it financed. Thanks, Rich.
So, the outline of the talk is very basically talk a little bit about how much money do you need, where and how do you get it and then I’ll walk through a couple of the companies I’ve been involved with by way of case study of where did we get our money and how did we get it.
The first is apologies for gross generalizations and wholesale simplifications with things like how does equity financing work? You know, that’s a course, not a five minutes. I do have a couple of charts and you know, this is definitely introductory on that and other topics and I do have opinions and I will act like I knew all the answers, I don’t but after a couple semesters teaching over in the MEM program on Entrepreneurship, I have to act like a know it. Then I was obviously not solely responsible for either raising the money or the success or the failure of the companies that I have been involved in. It always takes a village to make these things work.
Anyway, I like to think of everything as a process, financial resource development process in this case. So start here by defining what you need. Find some alternatives for getting it. Make a plan and test that with people that know a little bit about it and make it happen. Then, you go and do something else for a while. I think, as an entrepreneur, what you find out is there are always too many things to do that you have time for and you sort of, cycle your way through raising money, securing the intellectual property, developing the product, building the team, raising the money and around and around. Fortunately, raising money usually comes in lumps. If you’re lucky, big lumps and you don’t have to worry about it for a while, but it’s not something that goes away because generally, people won’t give you all the money you need at one time. It is an episodic kind of thing. So that’s the process.
Now, how much do you need? It varies a lot by the type enterprise that you trying to start. Minimum investment here for a Mac laptop and several weeks of pizza and Coca-cola, you can develop a Web 2.0 business. If you want to get in therapeutics, a pharmaceutical in the market, you might be talking about a billion dollars. In between there, you have everything else.
I’m currently involved in medical diagnostic technology. We are probably looking at $25 – $30 million to get our product on the market. It does take capital. That doesn’t mean that that’s what you need to start. All you need is guts to start, but it does mean that to get something on the market, you know that you got to need money on this order for these kinds of businesses.
Financing 101 Pt. 1
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