Last week, I sat in on presentations by the latest group of science and technology startup companies to go through First Flight Venture Center’s six-week Propeller program. This was a manufacturing-focused cohort.
If you are serious about starting a company, you need a business plan. You may have a good idea for a business. But you can’t develop a business plan in a vacuum. You need to communicate the value of your idea to investors, possible board members or mentors, and potential customers. What is the problem you are proposing to solve? What is the need for your product?
Who else is doing what you propose to do, and why is your product going to be better? Is there an actual market for your product, with customers who will pay you for it? Is it worth it to push forward with your idea? These are hard questions.
A lot of businesses literally start with an idea or image written on a napkin. There’s no office, no HR Department, no production line. Between the napkin and the first pitch meeting with investors – or even a wealthy relative – there should be a structured approach to answer these questions, and that’s what Propeller is intended to provide.
First Flight is a nonprofit business incubator and innovation hub in Research Triangle Park that seeks to help early-stage science and technology companies. It is one of the oldest business incubators in the state, founded in 1991, and has been an early home to more than 400 companies. It operates in one of the oldest structures in RTP, a 58-year-old building, and it has plans to double its footprint with a second building to provide more lab space for startups. That would be a big deal for the park, which has been part of North Carolina’s surge in life sciences and biotech in recent years.
Propeller is just one of First Flight’s programs to get startups to the market. It was launched two years ago with help from NC IDEA, the Durham-based foundation that promotes boost entrepreneurship in North Carolina. So far, Propeller has had 12 graduating cohorts, ranging from three to 10 companies. When the next group, the AgTech cohort, finishes up this week, the program will have had 84 graduates. Most have been female or minority-owned companies.
Last week a half dozen companies presented at First Flight. The program costs participants $1,000, but some scholarships are available with help from First Flight’s partners, in this case the NC Manufacturing Extension Partnership run by NC State’s Industry Expansion Solutions.
Last week’s cohort included presentations by:
- NC Solar Inverters, whose goal is to improve the reliability of solar systems with more reliable and affordable inverters.
- Sikaram Laboratories, whose focus is reducing the cost and length of clinical trials.
- Penkus, which is developing zero-waste manufacturing of children’s shoes so they can be repaired and reused.
- SmartKart, which wants to attach tablets to traditional shopping carts to engage children while their parents are shopping.
- SiNON Nano Sciences, which uses a nanoparticle drug delivery platform designed for treatment of central nervous system diseases.
- Applied Research Transformation, which has developed technology to optimize the structural strength and output of 3-D printing of concrete for commercial and military construction.
I was interested in why Applied Research’s founders, engineers Ladson Brearley and Rakesh Khan, had gone through the program. Both have had fairly extensive engineering and managerial careers. But it’s one thing to have worked for companies, even in senior positions, and another to start your own from scratch, and have to develop a business plan and raise money.
“I saw it as an opportunity to refine our business model,” says Brearley. “We know what to do on the technology side. But how to engage customers, how to put together a revenue projection, how to think about customer discovery and all that business side of getting a product to market – I feel like this was a good place to do that.”
The course was led by Emil Runge, First Flight’s director of programs, and Lydia Bjorklund, innovation programs manager. The program requires a fair amount of work, more than just three hours a week for class. He used Brearley and Khan as an example.
“They were talking to me about spending five or six hours every Tuesday, because we were meeting on Wednesdays, doing their homework for Propeller,” says Runge. “Essentially, they looked at it from the standpoint of, ‘We’re building our business plan through this.’ You get out of this what you put in.”
In that sense, Propeller is as much a test as it is a curriculum. In the course, students will be interacting a lot with First Flight facilitators and with the subject matter experts they bring in to talk to the class. They will be interacting with the First Flight Navigators, very experienced, accomplished business leaders and investors who act as mentors to students and companies at First Flight. Some of them were in the room last week and watching online, giving feedback and asking hard questions.
The people that Propeller students encounter during the program have a good opportunity to evaluate how ready and committed they are to take their ideas and fledgling businesses to the next level.
Starting a business will dominate your life. If a young company’s leaders approach Propeller the right way, they should finish up with a better business plan, with more of an idea of how to talk to investors, how to secure federal grants, a better sense of what the next steps are, plus potential partners from their cohort and new references and mentors. They will pass an important test.
“For each of us,” says Runge, “we have certain opportunities. And with that there are opportunity costs. This program is an opportunity. The reality is you have limited time. And so there may be other opportunities that are hitting you at that moment in time, which may distract you. Don’t overlook the fact that this Propeller opportunity has the potential to significantly improve your investability. It has the potential to significantly improve how you’re setting up your business plan. You can network within this cohort and you can end up with strategic partners that come out as a result of it, which in and of itself is massively important.”
One of the complaints I have heard for years is that North Carolina is a tough place for entrepreneurs to raise money. We are not in the same league as California or Massachusetts. However, there is money. Between 2018 and 2020, some $6.4 billion in venture capital flowed to North Carolina firms, according to Tracking Innovation, the report from the state’s Office of Science, Technology & Innovation. And the number of venture capital firms with a physical presence in the Southeast grew 30% from 2019 to 2021.
But funding, including the earliest seed money from private or public sources, will typically only go to companies that have done the kind of work that a Propeller program requires.