An Interview with
Soren Jonas Bruun
Chief Executive Officer and Founder, 1st Corporate Technologies Ltd.
Hanson Gifford
President and Chief Executive Officer, The Foundry
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Soren Jonas Bruun
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Hanson Gifford
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Succeeding as an entrepreneur requires both a novel idea and the business
acumen to bring it to market. Taking an innovative product from concept to
market is a daunting task, especially for people whose first passion is science,
not business. Simply knowing where to find venture capital can be a mystery.
An emerging model, called "accelerators," is helping early-stage
entrepreneurs reach investors and prepare to launch new products into wide
distribution. But not all accelerators are alike. Depending on the business
sector in which companies seek to grow, the path from early-stage
entrepreneurship to maturity may follow various routes. Soren Jonas Bruun and
Hanson Gifford run business accelerators that use very different models to help
promising companies navigate the challenging path to market.
Bruun's 1st Corporate Technologies, or 1CT, based in London, works primarily
with European growth firms, facilitating exits with international partners.
Gifford's California-based The Foundry, focuses on developing innovations in
medical devices. Here they share their insights about their individual models,
how business accelerators work best, and what early-stage entrepreneurs should
know about the process of getting to market.
Tell us a bit about how your model developed.
Gifford: We began in 1998 with about $4 million from a few angel
investors. We were able to start four companies—Evalve, Concentric Medical,
Emphasys Medical, and First to File, a patent-prosecuting dot-com.
We continue to refine the model. These days we raise money in advance for
just one company at a time. That focuses The Foundry and our investors on
identifying and creating the best company we can. If there's an idea that we or
our investors are not excited about, we don't work on it very long. We find that
getting all of the involved parties on the same side of the table as quickly as
possible, while retaining the flexibility to evolve and optimize the new
company's focus, is a key to creating better companies.
Bruun: While we don't take over partner companies, we make our
skills available to provide coaching, advice, and day-to-day assistance—exerting
influence at the same time as providing the funds necessary to kick-start the
international growth process. More often than not, we keep the current
management team in place and add our own seasoned professionals to the mix. The
great benefit of this from the larger perspective is that we are always building
new entrepreneurs.
One of our big strengths is introducing mature business development expertise
to a technology-centric business and also plugging these small businesses into a
wide grid of opportunities for international expansion. In short-hand, we refer
to it as "know-how and know-who." In certain segments, access to two customers
on the other side of the Atlantic can double a company's growth. We aim to
deliver this access, and also help entrepreneurs develop and package their
product to match the demands of potential customers.
How do you decide where to focus your efforts—which companies and
technologies to work with?
Bruun: We have a "dating before marriage" philosophy. We work
with the companies for three or four months, help them get their act together,
and figure out if it's in our best interest and the company's best interest for
us to work together. In this process, we work with management to align our
goals, build the plan, and attach the right experts. Most importantly, we talk
to the potential buyers and get their thumbs-up. If it is all good, then we
invest.
Gifford: We go after big-market opportunities and look for
technologies that are dramatically better, so that clinicians will be motivated
to adopt them. We then rapidly prototype and test our solution to prove
feasibility. We spend a great deal of time early on looking at the intellectual
property landscape, as well as the clinical trial plan, regulatory timeline,
cost, and market dynamics. And, although we assume that all of our companies
will need to succeed on their own, we do analyze whether there are likely
acquirers in this area that should be excited about what we're doing. Beyond
that, it's partly what projects we are curious and excited about.
What's your take on the scalability of your model?
Gifford: It doesn't feel very scalable to me, frankly. You need
a small group to invent great solutions, and then dig in and prioritize the
different ideas. I don't think that, instead of five people starting one company
a year, you could have fifty people starting ten companies a year, and still
maintain the same intensity of focus and quality of results. It just wouldn't be
the same.
Bruun: We've actually structured ourselves to be scalable, but
without having a fixed organization. We have four equity partners and seven
employees and executives. These are complemented by seventy-five international
project partners and more than 200 international experts. With this extended
network, we can scale our business to work with a wide range of growth companies
and always have access to experts who know particular market areas.
How do you measure success in your ventures?
Gifford: I would say that the most important thing is to create
new technologies that really help patients, and so far we are succeeding in that
regard. Secondly, we are creating challenging and fulfilling jobs for hundreds
of people.
From a financial standpoint, I don't expect to bat a thousand, but I do
believe that we'll provide a better success rate than these entrepreneurs
otherwise would have without us. We've had one initial public offering, one
acquisition that brought a very immediate nice return, and the others are on a
trajectory toward great success commercially as well as clinically. The
timelines for clinical approval of medical devices have lengthened over the past
decade, so we need to be patient with these companies as they develop. I am
optimistic that we'll be able to look back and say that we did quite well.
Bruun: We're pleased that we've completed twelve exits since
2005 with an aggregate exit value of about $350 million. Typically, 1CT
portfolio companies grow in value by a factor of three or more during the time
in which we are involved with them. To date, seven out of every ten partnerships
have resulted in a successful exit. We've facilitated transactions involving
very prestigious buyers—Adobe, Cisco, VMware, IBM.
Much of our work has been with Danish companies. We're particularly proud to
have the opportunity to partner with the Danish government's GazelleGrowth
program (gazellegrowth.com). It's designed to find Denmark's forty
most compelling companies and help introduce them to the international market,
particularly the U.S. market.
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About 1st Corporate Technologies
Working closely with more than seventy-five international project partners, London-based 1CT provides experts and capital to take emerging technology companies to their full potential. The company works primarily with European growth firms, adding value by offering tailored resources and access to strategic players, and helping its customers to a faster and larger exit. For more information, visit 1corptech.com.
About The Foundry
The Foundry is the premier medical device incubator for inventors to rapidly transform their concepts into companies. Led by a highly experienced team of technical and senior executives who have, prior to joining The Foundry, created medical device businesses generating more than $2.5 billion of value for their founders and investors, The Foundry is a full-capability incubator with resources spanning all functional areas and a fully equipped medical device development facility. For more information, visit the-foundry.com.
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What do budding entrepreneurs need to know that may not be obvious?
Bruun: I think there are several levers that make an
entrepreneurial firm more successful.
First, entrepreneurs need access to the right knowledge. They need to know
which doors to knock on and how to use the knowledge that is out there. If you
have that knowledge, it will double your chance of success. This sounds simple,
but it's not. It's easy for a company to become its own bottleneck—with a
potentially industry-changing product held back by limited knowledge. That's
where our experts are very useful.
The second lever is short technology lifespans. Technology is constantly
evolving; it won't last for seven years. Companies need to think about an exit
in two or three years to make it more likely that the technology will succeed.
Entrepreneurs and their shareholders should agree to this before they start. And
they need to understand where they're going—to define a goal. And that goes back
to knowledge: If you have the knowledge, then you can establish a realistic
goal.
And, finally, entrepreneurs should understand how to reach their goal. They
should have a roadmap that gets them to the endpoint they envision. Again, this
is where expertise of the sort we offer can prove vital.
Gifford: I think one of the things that we're very acutely aware
of—which may elude some early-stage entrepreneurs—is that getting the company
started is really just the beginning. There's a long pathway of development, and
we aren't eager to start something that we don't really believe in, because we
know how long we're going to be at it.
The experience of inventing a new idea is really fun, really fulfilling. As a
result, inventors often fall in love with their first idea because of the
feeling you get from having come up with it. People sometimes stop there. You
need to have confidence in yourself to step back and be really critical of that
idea, and ask yourself ten different ways, "What's wrong with that idea? What
alternatives or improvements would make it even more successful?" Once you
answer all those questions, eventually you will refine your concept to something
that's really good and protectable, and has legs to succeed clinically and
commercially. So take the time to be critical and come up with an idea even
better than the one you already have.
