Why would you want to start a company now? The reason is that it probably makes the most sense to do it right now.

Start a Company Now – You Must be Crazy!

Here’s my rationale: if you own an ongoing business that is cash-flowing in times like these, what should you do? One of the most beneficial things you can do is to diversify and create new products to sell more to your established customers and to new customers using your same production capability. Your new products will produce more sales, and that will pull you through what otherwise could have been a stagnant or down market. The same principle exists for starting a company. Here you are with a new product offering that hopefully your customers really need. Instead of sitting around waiting for things to get better, you can use your productive capability (you, yourself and you) to create sales that will likely only improve as the economy gets better.

There are a lot more reasons to take a risk at a time like this, but there are obviously a few challenges too. We face a time right now when credit from banks is hard to obtain and investors are only taking the best deals. You may have to go for more unconventional sources of money if you cannot get traditional funding.

Funding a Startup Has its Challenges.

Seed money in Utah is usually available from friends and family, angels and some venture capital funds (KickStart and UpStart are two examples). None of these sources have enough money to do more than a few good deals a year. However angel investors may be your most important category because of the number of individuals that are actively investing. There are five well-known angel groups in the state and many individual angels that are also actively investing. They are being careful, but they are getting deals done. Many larger investor organizations are hanging back to make sure the companies they have already funded get the support they need in these difficult times. However, a managing partner in a venture fund told me just a few months ago that he was willing to do deals now, when he saw a good one, if the entrepreneur was willing to cut his valuation in half to get it done. You may think that is taking advantage and being greedy, but what would you do if you were trying to get the best return you could for your investors and you had money to invest and many good opportunities to look at? You would shop for a bargain. That is what everyone is doing right now.

Are Entrepreneurs Hanging Back?

It is clear that many Utah entrepreneurs are seeing the opportunity to get a new business going. If you are interested in trying a startup, there are all kinds of traditional businesses to consider; however, I am most familiar with what are called tech-based startups. We have a bumper crop of tech-based startups in Utah right now. BYU has seen a 400 percent increase in new licenses this year and 18 startups in the last two years. The U of U has been responsible for 28 startups and USU 6 startups in the last two years. These new companies have been formed around or are based on technologies licensed from these Utah universities.

Having a License to a Good Patent can be a Big Advantage.

For those readers who are not fully aware, let me fill you in on the tech-based business opportunity that exists here in the State. The research based universities (BYU, U of U and USU) all have technology offices that take in inventions from their faculty research. There are 300 to 400 new inventions in the state each year. Many of these inventions are patented. A portion of them are good enough to be enterprise-worthy. You might say that these technology offices are like supermarkets of exclusive technologies. These technologies are available for license under reasonable terms. A licensing a patent can give you a big advantage in the marketplace – you are protected from anyone else making, buying, using or selling the invention that is patented for life of the patent. One BYU licensee who started a company last year just closed a round of financing that puts his company over $100 million in value.

It is easy to have a look at what is available at our universities without any obligation. Each university has a website that displays their licensable technology. Please come shopping. You may find something you really like.

BYU www.techtransfer.byu.edu

UofU www.tco.utah.edu

USU www.tco.usu.edu

Mike Alder is the director of BYU’s Tech Transfer Office.