Money is not a constraint to start-up growth, says Alok Tayi, the co-founder of TetraScience, an Internet-of-Things company founded to modernize research by bringing cloud software to the laboratory. He spoke last week at a symposium sponsored by Marconi Young Scholars at MIT. “Ultimately, the companies that are successful are the cockroaches—the companies that can survive in the most hostile environments.” He urges would-be entrepreneurs to “keep a near-zero burn rate.”
Ken Pesyna, a 2015 Marconi Young Scholar who joined Tayi on the program, agrees. Pesyna started RadioSense, a company developing centimeter-accurate GPS for a variety of business applications. “There’s a perception that raising financing immediately is a must for startup companies,” he says, “but to the extent that you can bootstrap the company off of product sales, the more valuable and less risky you will look when you are looking to raise money in the future.”
Hao Zou, another Marconi Young Scholar who has started Abundy Inc., a FinTech company focusing on using AI and big data technologies to create solutions for the future of institutional investing, says that just because another company in your space gets funded first, it doesn’t mean there’s not enough capital to go around. “If you see a few investors in a deal in your space, there are probably hundreds of others that still want into the space—it’s not hard to find additional sources of capital,” he says.
The four start-up founders provided battle-tested advice. Sasha Biberman, a Marconi Young Scholar who founded Jisto, a company that allows enterprises to make better use of their server capacity without impacting the performance of their core applications, pointed out that there are a number of paths to a start-up, ranging from a university research spinout to joining an existing mature start-up, starting a new one, or creating an “internal start-up” within a large company.
All the speakers offered practical advice on the challenges and stresses involved in going out on your own—from how to choose the CEO from among several partners (“choose the one who has the least to do, because he’ll be able to focus on running things”) to how to structure partners’ compensation (“start low and increase your pay only when you can afford it”). One challenge, trying to start a company while at the same time attempting to graduate, can be stressful. “Balancing writing a dissertation and company work in those last few months was a challenge,” says Pesyna. “Fortunately, I had two co-founders who were willing to take unpaid internships to start the company while I finished up.”
Pesyna also had practical insights for those who are selling to customers and investors. “Use hardware,” he says. “Even if you are a software company, being able to give a potential customer something on which your software runs—something they can touch and hold—is engaging.”
The start-up session was preceded by a poster session, at which students were invited to present their work. This is the third such session sponsored by the Marconi Young Scholars, who also have held events at Georgia Tech and at the Royal Society in London.
To learn more about Marconi Society Young Scholars, click here.