10 Survival Rules for Science-Driven Founders: Bridging Innovation and Market Realities

As a founder with a scientific research background, you must remember the simplest question at the very beginning of everything:

“Why?”

This question has guided your scientific research and also shaped your entrepreneurial mission.

Translating cutting-edge technology into innovative commercial ventures and significantly improving people’s lives is a pursuit that can bring profound, lifelong satisfaction. Although it may seem daunting, intimidating, or even leave you unsure of where to begin, it is undoubtedly worth the effort. Here, we summarize 10 survival rules to help founders with scientific research backgrounds navigate the cutthroat market.

Make full use of your university's resources.

Stay in your university laboratory for as long as possible and make full use of available resources, such as laboratory equipment, office facilities, and first-hand policy information. Spending the seed stage of your company within a university laboratory does not prevent founders from meeting with clients, formulating future plans, and recruiting a strong team, while also minimizing funding requirements. Prematurely spinning out early on only unnecessarily increases operational and equipment costs.

If licensing or assignment from a university is required due to issues involving service inventions and the commercialization of research outcomes, acquiring additional intellectual property (IP) is relatively “free.” For early-stage scientific achievements that have not yet been commercialized, there is little difference in opportunity cost for the university between licensing a single patent or an entire patent portfolio. From the company’s perspective, this means that newly acquired IP will have a lower marginal cost.

Finally, staying in a university laboratory allows founders to determine early on whether their technology or product is viable, or whether establishing a company is truly the right path. Tasks such as proof of concept, market research, and team building are best completed before raising capital. Once founders accept investors’ checks and terms, they assume substantial legal liabilities.

Marketing is important, and packaging is also important.

When founders are seeking investors, to balance the fear investors face regarding technological risks and ensure they are quickly captivated, it is essential to emphasize a bold hook in your messaging.

A bold and powerful lever might look like this:

• Precision Screening for Early-Stage Cancer via Liquid Biopsy

• 4D Intracardiac Echocardiography with Independently Developed Domestic Chinese Chip

• Blood-Brain Barrier Drug Delivery System

"Although it sounds difficult to achieve, this approach can significantly balance investors' perception of market risks and provide more room for technological risks."

On the other hand, this narrative approach also helps founders with a scientific research background to quickly adapt to market acceptance. It is an essential skill for such founders to translate what they perceive as groundbreaking discoveries into products viewed as disruptive by investors and the market, through a series of complementary narratives.

A company’s vision is key to attracting investors. Founders can emphasize their vision to secure more funding, but should not use it to fuel outlandish valuations.

Investors participating in subsequent funding rounds at high valuations also expect the company’s growth to enhance the value of their equity stakes. If you, as a founder, do not believe this is achievable, you should not accept their capital.

If any round of financing is overstated, founders may achieve short-term gains, but it will make all future fundraising significantly more difficult. If the company encounters market uncertainties or faces setbacks in its own development, the likelihood of a down round will increase substantially.

Remember,Financing is merely a means, not an end.Securing funding marks the true beginning of a founder’s work. While the fundraising process indeed brings founders a unique sense of accomplishment, I believe that researchers’ original motivation for pursuing science lies in their desire to change the world.

In the initial hiring phase, founders can prioritize candidates whose strengths complement their own as well as those of existing team members. Diversity from multiple perspectives is the root of creativity and can help founders address issues arising from blind spots.

The first 10 employees of a company should be the most diverse individuals the founders can find. In fact, this short-term objective is quite straightforward: to ensure that the company possesses both business and operational DNA from its early stages, aligning talent from all domains around the company’s vision.

While recruiting one’s own graduate students or “acquaintances” from one’s Chinese guanxi network may be convenient and efficient, a savvy founder should not take the easiest route simply to save time. Investing additional effort in assembling the most suitable team will yield returns that far outweigh the costs incurred.

Once a company’s products begin commercialization, founders have no time to think about anything else.

Why? Because the customer is king, demanding comprehensive service and care. Whether in the fields of biologics, biotechnology, or hard-tech sectors such as medical devices, product commercialization is accompanied by highly specialized after-sales service and maintenance. This not only consumes significant manpower, but it is also common for founders to personally visit clients to provide explanations and perform debugging.

Moreover, once investors see that a company has started generating revenue, their focus shifts to business growth. When a company’s performance begins to be measured by revenue, it becomes difficult to devote full attention to innovation. Instead, founders will need to build scaled sales and operations teams. For founders with a scientific research background, this requires entirely new know-how and will consume a significant proportion of their energy.

Do not cross this threshold lightly without adequate preparation. Consider defining metrics and milestones beyond revenue for each funding round. These indicators can help investors and employees perceive that the company is making progress and staying on track.

A key singularity in operating hard-tech companies is that every strategic shift adds years to the product development timeline.

Here, we hope that founders possess the foresight to plan for their products well in advance. Which star small-molecule drugs from major pharmaceutical companies are facing patent expiration in specific indications, and how many years until then? What proportion of large-scale medical equipment in China’s Grade 3A hospitals is approaching the end of its depreciation period and due for replacement, and within what timeframe? How many years will it take for emerging high-growth sectors to reach peak market demand for upstream raw materials and equipment?

Based on this awareness, founders can avoid product-market misalignment through the following points:

• Frequent prototyping and communication with potential customers (years in advance)

• Mandate the re-examination of assumptions and validation at each stage of product development.

• Conduct In-Depth Sales Forecasting Simulations to Establish Sufficient Production Capacity Several Years in Advance

• Meticulously manage the details of every contract, inventory order, and supply agreement.

Select the path that achieves break-even the fastest.

Founders should focus on identifying a market large enough for the company to reach break-even with a single product. If multiple markets are identified, it is advisable to choose the path of least resistance to achieving break-even.

Once a company becomes profitable, time is on your side. You can explore new opportunities at your own pace.

Identifying gaps in the existing product portfolio can also enhance the success rate of new products.

There are three ways to enter the existing product line:

• Direct Competition:The advantages are that the market exists, the product exists, and the budget is available, as you aim to eliminate a competitor. The challenges lie in typically thin marginal returns and intensified competition.

• Expand Product Line:The advantage is that the market exists, but the cost is that, by launching a new product, you must persuade customers to invest in new product SKUs. This places higher demands on founders’ resources and sales capabilities.

• Create a New Product Category:The advantage of creating an entirely new product category is that, once the market reaches scale, a company can enjoy a dominant, near-monopoly position for a considerable period. However, there may be no orders in the initial years, and the breakeven cycle will be longer.

  
  

It is recommended that the company’s initial application of its technology aim to expand its product line, rather than creating an entirely new category. The market tends to feel more confident about products that improve upon existing options.

Outsource all outsourceable steps, provided that quality control is properly maintained.

In practice, it is possible to conduct a comprehensive review of all business activities and perform value chain analysis across the company, ranging from core business units to support departments. The criteria for assessment are straightforward:“Is the company’s exceptional performance at this stage attractive to future acquirers?”If not, do not waste effort on investment; outsourcing is the better option. An IVD company will achieve a higher valuation due to robust cold-chain logistics management, not because it has a 50-person finance team.

Canceling an unsuccessful investigational product may be a significant setback, but the company can survive. In contrast, launching an unsuccessful product would be devastating to the company.

For every scientist, you need 10 engineers. For every 10 engineers, you need 100 personnel in sales, marketing, operations, and other functions. Bringing a product to market is extremely costly. (Although definitions of “market launch” may vary slightly, it is common for innovative drugs or therapies to see their stock prices halved and to resort to layoffs for survival after failing in Phase II or Phase III clinical trials.)

In addition to the human resources mentioned above, bringing a product to market involves extensive pre- and post-launch activities, including securing raw materials and production lines in advance to ensure manufacturing capacity, as well as establishing downstream sales channels, engaging distributors, and finalizing sales contracts. This supply chain is not only lengthy but also entails significant responsibilities and obligations.

Process management is the dividing line between chasing hype and effective execution. If you want to sleep soundly at night, be sure to implement robust process management.

Front-load all tasks that can be planned in advance. Spare no effort to ensure a rational process design, and meticulously handle data collection and documentation management at every step. Do not become the person whose product launch is delayed by 12 months due to requests from regulatory authorities for supplementary or revised materials, thereby missing the first-mover advantage. Such cases are not uncommon.

Founders who excel at hands-on laboratory work are undoubtedly familiar with this principle. Mastering experimental planning, maintaining rigorous lab records, and optimizing the use of consumables and equipment are traditional core competencies for researchers. The same principles apply to process management in business operations; only the medium has changed.