Chapter 13
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The American Chemical Society (ACS) Entrepreneurial Initiative Roger E. Brown,1 Elizabeth I. Fraser,1 Kenneth J. Polk,2 and David E. Harwell*,1 1Department
of Career Management and Development, American Chemical Society, 1155 16th Street NW, Washington, DC, 20036, United States 2Office of the Executive Director and CEO, American Chemical Society, 1155 16th Street NW, Washington, DC, 20036, United States *E-mail:
[email protected]
The ACS Entrepreneurial Initiative is a members-only program with a broad reach into the entrepreneurial support community. ACS members and chemical entrepreneurs alike benefitted from ACS’s pilot experiment, which was conducted during the 2011 to 2013 time period. From the pilot, ACS members obtained materials and instruction about entrepreneurship from the Entrepreneurial Training Program and access to information, professional services, mentors, and sources of funding or partnering for their start-ups from the Entrepreneurial Resources Center. Program participants have stated that the pilot offerings made a big difference, and their collective voices have told us that ACS can and must do more. Program participants have in turn stimulated the broader entrepreneurial community, and the assets produced through the program are being more widely distributed to colleges and universities through partnerships with campus innovation and entrepreneurial centers.
Introduction Since 2008, more than 25,000 jobs—including thousands in research and development (R&D) (1) —have been lost in chemical manufacturing companies in the United States, and layoffs continue. Between 1989 and 2009, a clear job loss trend is evident in Bureau of Labor Statistics data that suggests the loss of © 2014 American Chemical Society Cheng et al.; Careers, Entrepreneurship, and Diversity: Challenges and Opportunities in the Global Chemistry Enterprise ... ACS Symposium Series; American Chemical Society: Washington, DC, 2014.
approximately 300,000 full-time chemist jobs in the U.S. (2) Patterns of hiring are also changing. Chemical companies with more than 500 employees are hiring significantly fewer new graduates than in the past, while small businesses are hiring more, albeit at slower rates. While no single factor explains these recent job losses or trends, higher input costs, shrinking margins of large companies, and growing aversion to the risks and costs of investment in longer-term R&D appear to play significant roles.
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ACS Presidential Task Force on Innovation and Job Creation In early 2010, ACS President Joseph S. Francisco appointed a Presidential Task Force to explore the causes for these historic job losses and to recommend ways that ACS could help stimulate innovation and encourage the creation of jobs across the chemical enterprise. The Task Force was chaired by George Whitesides, the Woodford L. and Ann A. Flowers University Professor at Harvard University. It comprised eminent members of the chemical enterprise from industry, academia, and government, all with experience in entrepreneurship. They included Henry Chesbrough, University of California, Berkeley; Pat N. Confalone, DuPont; Robert H. Grubbs, California Institute of Technology; Charles Kresge, Dow Chemical; Michael Lefenfeld, SiGNa Chemistry; Chad A. Mirkin, Northwestern University; Kathleen M. Schulz, Business Results, Inc.; and Timothy M. Swager, Massachusetts Institute of Technology. The Task Force issued a report that was published online at www.acs.org/ creatingjobs. Recommendations of the Task Force are listed below.
Task Force Recommendations
1.
2.
3.
4.
ACS should develop a single organizational unit—a kind of “technological farmers’ market”—offering affordable (or free) help to entrepreneurs. ACS should increase its advocacy of policies at the federal and state level to improve the business environment for entrepreneurs and startup companies. ACS should work with academic institutions and other relevant organizations to promote awareness of career pathways and educational opportunities that involve or include entrepreneurship. ACS should increase public awareness of the value of early-stage entrepreneurship in the chemical enterprise with focused media coverage and information targeted to federal agencies that support chemistry.
ACS Entrepreneurial Initiative In August of 2011, the Society Committee on Budget and Finance recommended funding and the Board of Directors approved a 2-year pilot program 144 Cheng et al.; Careers, Entrepreneurship, and Diversity: Challenges and Opportunities in the Global Chemistry Enterprise ... ACS Symposium Series; American Chemical Society: Washington, DC, 2014.
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known as the Pilot Entrepreneurial Initiative (Pilot EI) to explore training and resources for chemical entrepreneurs through ACS. The Pilot EI consisted of two parts: the Entrepreneurial Resources Center (ERC) and the Entrepreneurial Training Program (ETP). The ERC was formed in response to Task Force Recommendation 1, and the ETP in response to Recommendation 3. The ERC is a virtual marketplace of entrepreneurial resources, where free, shared-cost, or reduced-cost access to ACS’s scientific information resources (CAS SciFinder and ACS Publications’ journals), ACS member expertise, and ACS’s key professional service providers (e.g., attorneys, finance, IT, human resources, and marketing) are provided to program participants. Participants can use these tools to plan, create, launch, operate, and grow their chemical start-ups. The Center provides participants with introductions to successful chemical entrepreneur mentors, sources of capital, and larger chemical innovators. The Center’s use of ACS’s core strengths in this manner provides ERC participants with a unique environment for accelerating the planning, creation, and growth of chemical start-ups. The mission and goal of the ETP was to provide ACS members with valuable training to advance their interest in pursuing entrepreneurial careers. The program licensed course content from the Kauffman Foundation’s FastTrac program. In 2012, ACS granted $500 scholarships to program participants who were selected through a competitive application process. Scholarship winners did not receive payment until they completed FastTrac training through existing course providers. In 2013, ACS brought the training in-house.
Results of Pilot The ERC accepted 20 start-up companies out of 26 which applied during its first round of competition in July 2012. As conceived, each of the company founders received access to ACS Publications journals, CAS SciFinder, key service providers, advisors, and introductions to sources of capital and larger innovation partners. ACS also teamed up with the San Diego Entrepreneurial Exchange (SDEE) (a local San Diego network of more than 1,600 chemical and other entrepreneurs) to host a pitching event at the Jansen Facility in La Jolla, CA, on December 11, 2012. This was called the ACS Showcase West (See ACS Showcase West Program, Appendix 4-1). Representatives from 19 companies advancing chemistry-based technologies pitched for funding to an in-person and online audience of angel investors, venture capitalists, and commercial partners. Of the 19 companies, 5 were ERC participants. Those presenting were eligible to receive a one-time $5,000 cash award for the “best pitch”. Company pitches were judged by a team of investors and Entrepreneurial Initiative Advisory Board (EIAB) representatives. The winning “best pitch” presenter was a local San Diego area company – Eolas Therapeutics – with a first in class therapeutic for smoking cessation/nicotine 145
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addiction. Seven of the companies that presented (two from ACS’s ERC) are now in discussions with potential investors as a result of the event. In January 2013, 11 of 14 start-up companies applying for entrance into the ERC were admitted into a new class for a 6-month term. These companies are currently utilizing the ERC’s resources including ACS Publications and CAS SciFinder. On March 27 and 28, 2013, the ERC successfully held ACS’s first-ever Entrepreneur Summit at the Chemical Heritage Foundation in Philadelphia, PA (See ACS Entrepreneurial Summit Program, Appendix 4-2). The Summit was overwhelmingly positively received, with about 93% of those attending being satisfied with the program content and forum. A total of 83 people attended the Summit (51 registered attendees, 26 presenters, and 5 staff). Two days of programming were included in the Summit which informed participants about pitching to investors, financing strategies, insights into strategic partner processes, challenges to commercializing chemical technologies, methods to demonstrate product value, to name a few topics. Presentations by experienced entrepreneurs and seasoned speakers made this forum a helpful addition to the ERC’s offerings. From this forum alone, ERC participants gained far greater insight into the business, legal, marketing, and finance aspects of commercializing products. Presentations from the summit were streamed online to allow off-site viewing. During the pilot program, the number of applications and the number of participants in both the ETP and ERC were lower than originally anticipated (see pilot EI metrics, Appendix 3). Studies indicate that marketing and awareness campaigns should be ramped up and optimized to capture the potential market for these programs. In 2012, a total of 56 applications were received for the ETP, and 29 were approved by the EIAB for entry to the program. During this first year of the pilot, approved applicants for the ETP received partial reimbursement for course registration costs through $500 scholarships which were distributed upon completion of training. ACS paid out $5,500 in scholarship funds for the program to 12 people. Although a total of 29 applicants were approved, only 12 people completed face-to-face training and qualified for reimbursement. Sixteen people never started the program, and two started but did not complete the training program. The primary reason cited for people who did not start the program was the burden of paying for the courses up front (tuition ranged from $700 to $1300), and the difference between the actual cost of the course and the amount received through the scholarship. For many, the financial burden was too high. Based on this feedback, the Pilot EI retooled. Starting in 2013, ETP participants did not incur a financial burden, because the course was offered at no cost to them online through ACS. As stipulated in the original funding request for the Pilot EI, the first year of the program was used to train facilitators for the course, and to build an online infrastructure. These preparations allowed ACS facilitators to offer the course directly to students online in 2013. In January 2013, 38 applicants were accepted into ETP out of the 56 that applied. The eight-week, online course started on February 26 with 39 participants. 146
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Conclusions and Future Directions The pilot Entrepreneurial Initiative (pilot EI) offerings were based on the recommendations of then ACS President Joseph S. Francisco’s Presidential Task Force on Innovation that chemical entrepreneurs need more training and affordable resources to plan, launch and grow chemistry-based start-ups. The pilot EI was a good start, but several lessons were learned from pilot program participant feedback, namely that: 1.
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2. 3. 4. 5. 6. 7.
Information about entrepreneurship is good, but hands-on instruction for creating a viable, sustainable business plan is better; Understanding the terminology of entrepreneurship is good, but knowing how it applies toward achieving an investment is better; Knowing what to do is good, but doing it is better; Networking with investors or partners is great, but due diligence and term sheet negotiations for funding events are better; Knowing what your technology does is good, but knowing what the customer wants and will pay for is better; Having colleagues on your management team is good, but having a knowledgeable, experienced, and capable executive team is better; and Concepts are great, but working prototypes are best.
These and other lessons have inspired and guided ACS efforts to assist chemical entrepreneurs. Future refinement and retooling of the ACS Entrepreneurial Initiative will better address the challenges associated with the most pressing, near-term need of nearly all chemical entrepreneurs, namely funding. Improved opportunities for job creation by these chemical entrepreneurs are more likely to be achieved from investments into de-risked technologies and start-ups.
Acknowledgments Many thanks to the members of the Entrepreneurial Initiative Task Force who provided advice, direction, and assistance during the implementation and evaluation of the Pilot – Entrepreneurial Initiative.
References 1.
2.
Voith, M.; McCoy, M.; Reisch, M. S.; Tullo, A.H.; Tremblay, J. Facts & Figures of the Chemical Industry. Chem. Eng. News. 2010, 88, 33–67. Pages 50-53 emphasize layoffs in the chemical and pharmaceutical industry between 1999 and 2009. National Occupational Employment and Wage Estimates United States, 1989-2009; Technical Report; U.S. Department of Labor, Bureau of Labor Statistics: Washington, DC, 2009. 147
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