Last week, I attended a speed-dating networking event with a few PhD founders from the University of Washington who want to spinout a startup. Six scientists and engineers with exciting technology, trying to figure out how to start a startup after their PhDs.
We spent most of the time talking about what it will take to raise money from venture capitalists, a common topic of conversation.
But then one of the PhD entrepreneurs asked me a question I rarely hear: How do I know if I should start a company?
I wrote a couple of weeks ago about why I think PhDs can make great founders and entrepreneurs. And I stand by that belief. But what I didn’t talk about in that article is whether or not a PhD should become an entrepreneur.
Any PhD can be an entrepreneur. But not every PhD should be an entrepreneur.
What does this mean? Some people dismiss PhDs as not being fit for entrepreneurship. They’re wrong. But only few PhDs are cut out to be a founder, and even fewer find themselves at the right place and right time to be a founder.
In this post, I’ll cover:
How to think about preparing mentally for the founder role.
How to evaluate if you are solving a problem that’s a good fit for a startup.
How to find ways to pay yourself as you start a company.
So, if you are a PhD considering moving into the founder role, let’s talk about whether that’s the right move given who you are and where you are at.
Entrepreneurship is a challenging path, one with super highs and rock bottom lows.
When I was CEO of BlueDot Photonics, I rode that roller coaster. We started off, and it was fun and exciting. I travelled to conferences and connected with people across the solar industry. We started winning grants and awards, culminating in a $1M award from the Department of Energy.
Then 2020 rolled around and the pandemic hit. Suddenly, my co-founders couldn’t work in the lab, our fundraising effort collapsed, and I didn’t have the working capital or cost share to execute on our remibursement-based DOE contract.
But I kept grinding. Mid-way through the year, I had secured a secondary grant for the DOE project from Sustainable Grant Making Partners along with a working capital line of credit from Craft3. I found my first institutional investors, Ideaship and the Washington Research Fund, who helped us secure our tech license from the University of Washington and pay for legal fees.
We were able to restart pitching to investors and secure our pre-seed round to provide the two years of runway we needed to execute on our development plan. 18-months later, we were pivoting hard as technical challenges slowed our progress, and I had to let go of several team members.
This is the up and down of being a founder, and you have to embrace it.
Along the way, you’ll need to make sacrifices — professionally and personally. You are going to invest five or more years of the prime of your life and fail in achieving your goals. You’ll be trading a stable salary for the uncertainty of a big startup exit. You’ll miss out on events with friends and family. You’ll feel lonely lots of the time, working mostly on your own for months during the earliest stages.
It’s a grind, with more than half of founders self-report feelings of burnout. This part of the reason why my business partner talks about how startup founders need to train like Olympians.
So, “Are you prepared to be an entrepreneur?”
There is no right or wrong answer. It’s highly personal.
But if you don’t have the personal motivation and drive to weather the tough times and relish the good times, there is little chance of success and little chance of it being a rewarding experience.
So be honest with yourself and really make sure it is for you.
Questions to ask yourself to see if entrepreneurship is for you:
How do situations with high levels of uncertainty make you feel?
How comfortable are you with making decisions with little to no data?
How easy is it for you to admit you are wrong and make a change to what you are doing?
How well can you prioritize and multi-task?
How well do you handle setbacks and “failure”?
Have you ever noticed how introductions in research papers in a given field sound the same?
Many of them are some variation of “This is a really big problem. Here is why it hasn’t been solved. Here is how our results are a huge step forward in solving the problem.”
And yes, the problems are big: climate change, cancer, pandemics, etc.
But these aren’t problems that directly lend themselves to entrepreneurship. Let’s take climate change as an example. I have seen multiple founders begin their pitch saying, “The world is facing an existential crisis because of climate change. Our company is going to solve climate change by electrifying transportation.”
Companies need to make money, and this problem-solution statement makes no mention of how the company is going to make money.
When I ask, “Are you solving a problem that someone will pay you to solve?” you need to decide whether this is a problem that real people with money will pay you to solve. I’ve talked about how to think about market analysis in a previous post and how to make sure you have a business and not a science project, so I won’t go into detail here, but go back and read those if you need a refresher.
If people who will pay for you to solve their problem don’t exist, then you can’t have a sustainable business, which means starting a company is a bad idea.
Questions to ask to see if you have a real problem?
How many potential customers have you talked to who confirm this is a “hair-on-fire” problem? (should be dozens)
How much money is the problem currently costing someone? (the more the better)
How big are the barriers for customers to switch to new products or services? (hopefully, not so large that they won’t, but not so small that they won’t stick around)
Let’s be real: you need money. You need to pay for food, shelter, healthcare, etc.
Unfortunately, one reality of entrepreneurship is that founders won’t always get paid, especially at the beginning.
For a PhD right out of graduate school, not getting paid is a deal-breaker. You probably have limited savings, maybe even student loan debt. At that speed networking event I mentioned at the beginning of the post, one of the founders was direct: “I need to get paid in four months. Where can I get money?”
So, “bootstrapping” with no pay is not in the cards.
Fortunately, there is a growing number of resources available to help address this issue.
Many universities now offer commercialization fellowships for graduates. One example is the University of Washington Postdoctoral Entrepreneurship Program. There are also several fellowships offered through the DOE national labs (e.g., Chain Reaction Innovations), other private investors (e.g., Breakthrough Energy Fellows), and non-profits (e.g., Activate).
The goal of these programs is to give the PhD graduate 1-2 years of runway to validate the startup's core concept and then secure additional funding.
You can also secure grants from federal and state governments to continue R&D as a collaboration between the university and the startup. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are the most well known grants designed with this in mind. These grants can help smooth the transition from academia into the startup.
If these aren’t an option or don’t move fast enough, securing investment from friends and family is a great option. It’s used frequently by first-time entrepreneurs to get started.
The critical thing is you have to have a plan to get paid.
Questions to ask if you can afford to be an entrepreneur?
What resources are available at your university to extend your runway in academia?
Do you have time to go through the application process for a fellowship or a grant?
Do you have friends and family who can be your first investors?
What can you do to reduce your personal expenses to give you more time?
The PhD student/founder I met at the speed networking event demonstrated the type of self-awareness more would-be-founders need to show. I shared these three questions with them during our short time together, and their eyes went wide and they took a long, deep breath. “Oh wow, I never thought about all of this,” they said.”
“That’s OK,” I replied. “Just find some time to think about it, talk with your friends and family, and then make a decision.”
Being a founder is amazing, but it comes with a unique set of challenges and risks that entrepreneurially curious PhDs should know about and reflect on before embarking on the path.
You might find yourself getting swept up in the idea of being a founder. But if you don’t look in the mirror now, in a couple of years you might realize you chose the wrong path.
If you’re a PhD student trying to make the decision, I’d love to hear your situation. Subscribe to this newsletter and leave a comment, and I’ll set up a 30-minute call, no strings attached.
Jared Silvia, PhD has worked in the energy and materials sector for over 15 years, as a consultant at McKinsey and Co., Director of Product Management and Marketing at Doosan GridTech, and as CEO and Co-founder of BlueDot Photonics. He is now Partner at Gliding Ant Ventures, where he co-builds climate tech, deep tech, and frontier tech companies with technical founders from science and engineering backgrounds.
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