The company founded by Case Western Reserve University and Harvard grad Manual Glynias and Nobel laureate Dr. Walter Gilbert has successfully pioneered technology that accelerates the drug discovery process by integrating diverse amounts of genomic data and chemical structure information.
However, even with innovative technology and strong management, NetGenics struggled in the beginning to find investors.
One of the perceived drawbacks was its downtown Cleveland headquarters.
"What we've found is there are, in fact, a lot of good technology people here in Cleveland," Glynias says. "We have Case Western, we have Cleveland Clinic, we have a number of Fortune 500 companies that are pumping out and creating good technology and good technology people. But what seems to be missing is the connection to business.
"For whatever reason, it seems to be difficult for the technology person who's got an idea to find some businesspeople who know how to help him turn his idea into a business."
Speaking at the Cleveland Engineering Society's Leadership breakfast series, Glynias discussed how he found investors and overcame the obstacles to grow NetGenics to where it is today -- on the verge of going public.
While no one likes to fail, Glynias says that risk shouldn't hold you back.
"It's hard to walk away from your nice, safe Fortune 500 job and take a risk to start your own company even if the reward could be so great," Glynias says. "Most of us don't have the personal experience of how great the rewards could be."
A good entrepreneur in the tech field simply chalks up a failing company as a learning experience for the next endeavor.
Look around for funding
The money is out there; you just need to get on a plane to find it, says Glynias. He admits he was turned down by several investors in Cleveland before finding funding in New York City.
"We asked for $1 million; he (the investor) said that's not enough and gave us $1.5 million," he says. "Finding money is possible, you just have to go out there and work at it."
West Coast investors, he says, are less likely than East Coast investors to invest in a Cleveland company. Glynias recalls one Menlo Park, Calif., venture capital firm telling him, "We like to drive to be able to see our investments," after recommending that NetGenics move to Silicon Valley.
Get good advice
Everybody knows you need to have a solid business plan to solicit funding, but it's not always easy when your background is not in business. Get help, Glynias says -- there's plenty of help out there.
"The amount of money to go out and use a real law firm instead of your brother-in-law or your cousin who knows how to do corporation papers; it's worth every penny to do that the right way," he says.
Plan the exit
Make sure your investors know when they will be able to cash out. Although most venture capital firms want to get liquid quickly, some will stay on as long as you have a plan.
Glynias explains, "Whether they're investing in the early stages or the late stages (the lack of a solid exit plan) can cause a little acrimony between you and the investor." How to reach: NetGenics, (216) 861-4007
Morgan Lewis Jr. (firstname.lastname@example.org) is a reporter at SBN Magazine.