Starting a new business isn’t easy, not even if you have a breakthrough Cornell invention to base it on. On average, around half of all new businesses are still viable five years after launch. Cornell entrepreneurs can give themselves a better chance at success, however, by joining an incubator, according to Robert M. Scharf, director of the Praxis Center for Venture Development.
“There’s a national statistic that says startup incubators raise the likelihood of success for a new venture by over 75 percent,” he says.
Robert Scharf ’77, Nurturing Cornell’s Startup Culture at the Praxis Center for Venture Development
Scharf ’77 recently returned to Cornell to head the Praxis Center after a career working at big engineering firms and founding multiple startups. The center, which opened in March 2019, is Cornell’s on-campus incubator for startup companies looking to commercialize Cornell-based breakthrough innovations in the engineering, digital, and physical sciences. Six fledgling startups applied to join the incubator by August 2019 as the inaugural group of companies.
“Most of our clients are first-time entrepreneurs and the vast majority have never worked anywhere but in academia,” Scharf says. “The center is here to help them find their way through all the minefields to commercialize these great inventions. In many cases, I’m a cheerleader, a guide, a technical consultant, and a network hub for these new entrepreneurs.”
Louis Walcer ’74, Guiding Cornell Startups at the Kevin M. McGovern Family Center for Venture Development in the Life Sciences
Scharf is not the first alumnus to take his hard-won business insights to Cornell-based entrepreneurs. Back in 2011, Louis Walcer ’74 broke new ground when he returned to the university as director of the newly created Kevin M. McGovern Family Center for Venture Development in the Life Sciences, after working for large healthcare companies like Merck & Co. and Wyeth Pharmaceuticals as well as multiple neuroscience startups.
“I came here on a mission,” Walcer says. “Back when I worked for large drug companies in mergers and acquisitions, I got a very clear picture of how large companies would be interested in revolutionary technology emerging from academic institutions. Those technologies, however, often weren’t advanced enough to the point where the risk was taken out of them. It’s the small, privately funded companies that will take the technology out of academic labs and move it through initial pre-clinical, pharmaceutical development. For each step on that pathway, the risk to a potential acquirer is reduced, until it is reduced enough that the revolutionary technology can be considered acquirable by the big company.”
Like Scharf, Walcer’s job is to help shepherd new startups along the road to ultimate acquirability, or if the startup prefers, viability as an independent company. Today, under Walcer’s guidance, the McGovern Center is home to 13 up-and-coming life sciences companies—most based on Cornell breakthroughs. An additional five startups have graduated successfully from the center and are now viable companies—some traded on the NASDAQ stock exchange, others acquired by larger companies. These have resulted in strong returns for investors.
“Being able to demonstrate, in real terms, that graduates and postdocs at Cornell can and will found companies that can be successful is pretty sweet,” Walcer says. “Similarly, when faculty have become successful entrepreneurs, that too is really gratifying.”
The Rugged and the Passionate—Entrepreneurs Who Hit Their Stride
Both Scharf and Walcer are intimately acquainted with the ins and outs of starting a company, based on innovative technology, as well as the motivations that drive entrepreneurs. For Scharf the path to startups began with frustration after working 20 years for large engineering companies. He felt he had reached the limit of what he could achieve in that arena.
“The industry wasn’t advancing very rapidly, and they weren’t challenging themselves,” he says. “I wanted to do more consequential things.”
A tornado destroyed Scharf’s house on the outskirts of Memphis, Tennessee, in 1994, and he used that disaster as a stepping stone to entrepreneurship. Leaving his old life behind, he and a partner founded a company that produced electronic components for the telecom industry. After that company, now called Stratos Lightwave, went through an initial public offering (IPO) and was acquired by Bel Engineering, Scharf and his partner went on to found another startup, Protokraft, based on an innovative new way to package aerospace components for improving their reliability. Multiple orders from the United States Army helped drive Protokraft’s success, and Scharf ultimately sold the company to Moog Inc.
“I rely on the consolidated social network of all these people. That’s the secret sauce that makes the McGovern Center work.”
For Walcer, startups offered something he wasn’t getting as a senior executive at a large drug company. “I got the sense that the smaller companies were doing the more interesting stuff,” he says. “The environment at the big companies was not terribly supportive of innovation, and I became aware there would be more fun and more opportunity for professional gratification by going smaller.” So he did. He took the position of vice president of business development, sales, and marketing for Gliatech, a small neuroscience startup, becoming the company’s first non-scientific employee. Gliatech ultimately commercialized a new medical device used with spine surgery, had an IPO, and became listed on the NASDAQ stock exchange.
From that beginning, Walcer went on to start another company, Copernicus Gene Systems, based on gene therapy innovation developed at Case Western Reserve University, which didn’t quite pan out. That was followed by a stint as president and general manager of Medimop Medical Projects Ltd., a company that successfully marketed innovative drug delivery technology and was ultimately bought out by larger firm. Not yet ready to retire, Walcer instead joined the nonprofit Cleveland Clinic, developing and incubating new health technology ventures.
The Incubators’ Remarkable Asset—Cornell Alumni
The step from the Cleveland Clinic to the McGovern Center was a natural one that Walcer has never regretted. “It’s immensely satisfying doing this job,” he says. “When you’re a student, you go to college and you take what you can get from that experience. It’s very rare to think in terms of what the university gets from you. As an alumnus, you can donate and serve as an officer of your class and so on. But heading an incubator is a very different thing. It’s hands on. When I started, the center’s offices were built, the labs were furnished, but nobody was home. Accumulating the lab equipment and finding the companies to populate the center was the easy part, though. The hard part was putting this all together so that the assets of a large nonprofit university could be safely deployed to help young, for-profit companies move forward.”
Both Walcer and Scharf point to the rich Cornell network of experts who serve as mentors for the startups’ management teams, and executives-in-residence at the incubators as well advisory council members. “Among the 300,000 living Cornell alumni, there’s an expert in almost everything,” Scharf says. “It’s almost unimaginable that we can’t find someone in that network who can help us with a specific issue.”
“I rely on the consolidated social network of all these people,” Walcer says. “That’s the secret sauce that makes the McGovern Center work. They not only advise current clients but pick winners inbound to the center and determine when clients are ready to graduate and raise serious money.”
Any influence Walcer and Scharf have on the startups they nurture has to be earned, Scharf says. “We have to convince them that we’ve been through this before,” he explains. “We may not be experts on a company’s technology, but we’ve taken new technologies to market and were successful. And when we weren’t successful, we know why it didn’t work.”
“Clients know the gray hairs we have come from actual experience,” Walcer adds. “At the very least when someone comes to us with a question, we can say: ‘This is what we did; don’t be that stupid!’”