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Unlike Bill Gates or Steve Jobs, Raj Krishnan couldn’t just start his company in a garage. His fledgling biotech needed centrifuges, fume hoods and refrigerators to store blood samples.
Krishnan had made a big discovery that could turn into a very successful company: using just a few drops of blood to predict whether a person has cancer. But he couldn’t just stroll into an investment company and tell deep-pocketed venture capitalists to write him a check.
He was, after all, still a graduate student at University of California, San Diego. He was in his mid-20s, but could be mistaken for a high schooler half his age.
He’s no business student, but Krishnan knew how starting a company would work: He needed money, and lots of it. But before that, he needed credibility. A good idea only goes so far in the biotech industry. What investors really want is evidence the idea actually works.
The extra money needed to launch a biotech (to pay for things like lab space and research materials), along with the delayed payoff for investors (companies must wait longer to actually make money because their drugs and medical devices have to win government approval), make the biotech business very tricky for entrepreneurs.
This quagmire usually keeps science graduate students from attempting the feat straight out of school. Most look for jobs, either in academia or the for-profit world, and then might attempt entrepreneurship later on in their careers. The majority of local start-ups come from people who have long been in the business or academia.
But Krishnan couldn’t wait. He started graduate school with two goals, to start his own company and cure cancer, and so when he saw his chance to work on both, he took it. We’re following Krishnan’s journey from grad student to CEO of his newly-founded company, Biological Dynamics.
Krishnan started with one of the few options available to a young student like him. He gathered a team of a few friends and started entering student competitions, which award the best posters or business plans with small chunks of change.
Very small chunks of change. In its first competition, the UCSD BioEngineering Graduate Student Symposium, Biological Dynamics landed in third place, winning a measly $15. But the next year, 2008, the team came in second, earning them $50. When they finally won first place the year after that, they brought home $200.
Still, the money added up, and in less than three years, the company had netted $47,240 in competition winnings. Even better, they had built enough credibility to hook much bigger fish.
“No one’s going to trust a 28-year-old with millions of dollars,” Krishnan said. “But those competitions were like trials by fire, and showed what we could do.”
For students without Krishnan’s winning record, San Diego offers another funding option not found in many other cities. UCSD’s “proof of concept” center was the first in the country to give funding to students to help them do enough research to show their technologies work. There are only a few other university incubators in the country.
“What often ends up happening is there is this huge gap between academia and industry,” said Rosibel Ochoa, the center’s director. “We bridge that gap.”
Krishnan didn’t apply for a grant from the center, but Ochoa did match him up with a powerful advisor: Stephen Flaim, the president of the investment group Tech Coast Angels.
Biological Dynamics also stuck a few other big scientific names under its belt, including Dr. Eric Tool, the director of the Scripps Translational Science Institute who became the chairman of the company’s scientific advisory board, and Michael Heller, Krishnan’s advisor at UCSD.
Krishnan said these prominent scientists, along with Biological Dynamics’s credibility and hard-to-say-no-to pitch (“we can take a few drops of your blood and tell you if you have cancer”), helped his company quickly raise $2 million in investments.
“We raised our money in six months, which is unheard of during a recession,” he said. “We were like, ‘Holy crap.’”
Now Krishnan and his Biological Dynamics team are on their way. They rented lab space in the General Atomics building on the Torrey Pines mesa and are working on developing prototypes for the cancer-detecting product. So far, they’ve been successful, but Krishnan said his team also has a backup plan.
“If worst comes to worst, we can always go back and get jobs,” he said.