Gainesville Entrepreneurs: Chuck Soponis

Monika's post about Unleashing Community Power got me thinking about all the untapped entrepreneurial knowledge and experience we have locally. As an investor, I'm lucky enough to meet and learn from a variety of Florida's top entrepreneurs, but too many of their lessons never make it to the people that could benefit most: other entrepreneurs, particularly new entrepreneurs. Therefore, I'd like to share some entrepreneur stories here; not just for good reading, but also as a catalyst for community discussion.

My.GAIN-net member and one of Gainesville's most prolific entrepreneurs, Chuck Soponis, was kind enough to accept my challenge and his answers were even more thorough than I'd hoped. If you're starting or growing a business in Gainesville or beyond, I hope you'll take his lessons to heart...

What businesses have you started/built?

I have been involved with nine early-stage biotech and medical device companies. The companies developed innovative and proprietary technologies and products.

What are the top three lessons learned from starting/building companies?

A. Young companies invariably need more capital than they forecast. Optimism is an essential trait for an entrepreneur, but that optimism often leads the entrepreneur to believe only in the best-case scenario. When Murphy’s Law kicks in, as it too often does, the company finds itself in desperate need of more funds than anticipated.

B. No company ever went broke through dilution. Too many founders blindly resist giving up significant equity for an investment, when getting the investment must be the paramount concern. Start-up capital is the most difficult funding to obtain, risk is at its highest at this point, and so significant dilution is inevitable. Accept it and build your company.

C. Scientists can easily fall in love with their technologies, to the detriment of the enterprise. Funding for further research to continue development of the technology must be directly related to the commercial application of the technology, which is a concept that scientists enamored with their inventions do not want to accept. A dispassionate evaluation of the R&D program must result in a focus on developing products, not more science.

How did you fund your businesses and why those approaches?

My approach has been to find the money wherever I can. I have funded companies with grants, sales of tax losses, corporate alliances, venture capital, and angel investors. In one situation, I used the public market in a non-traditional way. My start-up company had an esoteric cutting edge technology that few could understand and appreciate, so it was very difficult to finance. I found one investment banking analyst who grasped the potential of the technology and became our champion within the investment bank. We had no startup funds, so I arranged a reverse merger with a dormant listed company that had enough cash on hand to fund a public offering of the merged company’s shares. The deal worked out well for all parties. In another instance I had an unproven one-product technology with incredible upside if successful. The sizzle of this technology allowed us to undertake a Canadian IPO to raise our starting capital.

Who was your first paying customer and how did you get them?

My first “paying customer” involved a corporate alliance that provided upfront and milestone payments for technology rights. To attract a partner, we assessed what we would need to demonstrate to entice the partner to pay money to us. We focused all of our efforts on generating the data/results that would get us there. We then approached seven of the most likely candidates with our data and were able to close a deal with the best of four proposed partnerships.

What person (non-employee) or entity was most helpful to your success?

Without question, my wife has been the enabling factor in my pursuit of entrepreneurial adventures. The entrepreneurial highway is full of potholes and detours, many of which are disheartening and utterly demoralizing. I could not have continued without the emotional support of a steadfast partner.

What is one thing you learned about hiring, firing or managing people?

Several things come to mind. You create and nurture a positive corporate culture, and you need to ensure that prospective employees fit into that culture. Also, sharing as much information as possible with all employees promotes an emotional investment in the company for your employees. They will feel and know they are a key part of the enterprise.

The biggest personnel mistake executives in small companies make is delay in firing employees who need to be separated from the company. People who do not perform as needed or do not buy into and support the corporate culture adversely affect morale and performance. The longer these employees remain in place, the more they can negatively affect the company. I doubt if anyone has been fired too soon; all too often people have been fired too late.

What is one thing you have learned about managing investors or boards?

A constant flow of information, both good and bad, is critical for a positive relationship with Directors and key investors. These people are sophisticated and accept the fact that negative events will occur, but they will not react favorably to bad news when it comes as a total surprise. Sharing all relevant information creates a foundation of trust in the executive for Directors and investors.

What was the hardest part of starting/building your company?

Raising the necessary capital is undoubtedly the most difficult period for a startup company. It is so easy to get discouraged, but persistence is mandatory. If it were easy, everyone would do it. Recurring critical analysis of the pitch and the targeted investor groups is a must.

Thanks Chuck!

If Chuck's answers sparked additional thoughts or questions for you, please reply to this discussion below...