The road is long from a breakthrough invention in a Cornell lab to a viable company based on that invention. In between, there are years of product development, business planning, and network building without any assurance the effort and cost will be rewarded. This is the world of the entrepreneur. It’s one that most Cornell researchers have little experience with, but luckily there are programs available to help them successfully negotiate the startup process.
An Invaluable First Step, NEXUS-NY
For Conamix—a startup company based on Cornell technology created in the lab of Tobias Hanrath, Smith School of Chemical and Biomolecular Engineering—a New York state program called NEXUS-NY was a crucial first step toward commercialization. NEXUS-NY is a clean energy seed accelerator, a program set up to help translate clean-energy research into commercial products. Every year, ten entrepreneurial teams from across New York are accepted into the ten-month program, which is funded by the New York State Energy Research and Development Authority (NYSERDA) and administered by High Tech Rochester. Program participants are also eligible to receive approximately $50,000 of equity-free direct financial support.
“NEXUS-NY is doing great things, especially for those of us in the academic environment who feel we have some interesting technology coming out of our labs,” says Hanrath, who is currently Conamix’s scientific adviser. “NEXUS-NY is really useful in facilitating the transition across the valley of death, where you have interesting potential applications for your research listed in your academic paper, but there’s some gap between that and actually translating it into practice.”
Hanrath and graduate student Benjamin T. Richards, PhD’17 Materials Science, co-invented a process for making low-priced, nanostructured silicon at high volume for lithium-ion batteries. Their invention is two-fold: the nanostructured silicon and the reactor which makes it possible to fabricate the material at high volume. These are what Conamix seeks to commercialize, specifically for the anode side of the battery.
A battery is like a sandwich, with electrodes on either side—an anode that receives electricity and a cathode where the electricity exits—and in between, an electrolyte that facilitates the flow of ions between the anode and the cathode. Conventional high-capacity rechargeable batteries rely on a carbon compound for the electrodes. “We substitute silicon for the carbon to improve the energy density of the anode side of the battery,” says Charles P. Hamilton, MBA’04 Johnson School, chief executive officer of Conamix. “As a result, there’s a significant increase in the capacity of the entire battery.”
Lithium-ion batteries are commonly found in small electronics like cell phones and smart watches, but they are also used in large applications like electronic cars, which need much more silicon. “There has been enormous interest for years in silicon for high-capacity lithium-ion batteries,” Hanrath explains. “The problem is that most of the research that tried to bring that to fruition came from microelectronics. They are making thin films to put on a computer chip, but if you want to make one electric vehicle with a silicon-based anode, you need about 10 kilograms of silicon. The fabrication approaches established from microelectronics are simply not geared toward kilogram quantities, but ours are. Conamix can nanostructure silicon, and we can do it in a continuous way at large scale.”
Hanrath and Richards believed they had developed something with great commercial potential, but they weren’t sure how to capitalize on their invention. As a first step, in 2014 they applied to NEXUS-NY, which was then in its inaugural year. They were accepted into the program and assigned to a business mentor, Charles Hamilton.
Hamilton had already been involved in the startups of three other Cornell technology companies, including Novomer, which is based on technology invented in the lab of Geoffrey W. Coates, Chemistry and Chemical Biology. He saw fairly quickly that Hanrath’s and Richards’ invention had potential, and in the interim between Phase One and Phase Two of the NEXUS-NY program, Hamilton joined with Hanrath to found Conamix. “I work with new companies all the time,” says Hamilton, “but I don’t usually become one of their founders. With Conamix I saw interesting technology with real potential, and I was a good fit with the team.”
Working with NEXUS-NY
The two phases of NEXUS-NY work together to help fledgling entrepreneurial teams test numerous business hypotheses, further develop and build prototypes of their product, identify their optimal position in the marketplace, and create a plan to pursue it. In Phase One, which lasts 12 weeks, teams are asked to focus on customer discovery and speak to at least 50 potential customers. “That was eye opening,” says Hanrath. “The purpose is to find out what the unmet customer need is and to understand whether your product can fill it. Then you work out a strategy for commercializing your product.”
During the customer discovery phase of NEXUS-NY, the Conamix team talked to battery manufacturers, battery materials suppliers, and end users, and learned that the financial and logistical barriers to entry into battery manufacturing were substantial. They also found that the big existing battery manufacturers wanted advanced working prototypes and outside third-party testing of the product before they would even consider a new startup’s technology. As part of the NEXUS-NY program, the team built a minimal viable prototype (MVP) to illustrate their product advantage to potential customers. At the close of Phase One, they presented to a group of venture capitalists and potential investors.
“They dig in and really help the team ask the right questions: Do customers care about the product? Is it the right time to start a company based on the product?… All the things that go into starting a new company.”
“We were selected to advance to Phase Two,” says Hamilton. “That’s when you do work for proof-of-concept, to test out your product and see if it really can do what you theorized it could do when you created the MVP.” Phase Two lasts six months and culminates with Demo Day, when teams present their technology or business to a wide audience. “There’s an ecosystem of startup people and potential investors who come to Demo Day,” says Hamilton. “We talked to all kinds of folks, and it looked very positive that we were going to secure funding.”
Securing a Seed-Stage Funder
Conamix eventually closed outside funding with Excell Partners, a seed-stage investment funder that invests funds provided by New York State. Excell works closely with NEXUS-NY. “Every company that finishes the second phase of NEXUS-NY will have met everyone at Excell and pitched to them two or three times,” says Hamilton. “You don’t have to go through NEXUS-NY to approach Excell, but Excell takes extra time to look at companies that have gone through that program.”
Excell liked what they saw in Conamix and invested $50,000. High Tech Rochester then joined the investment with another $50,000. Conamix also became a client company of the McGovern Center, Cornell’s life sciences technology incubator. The time spent taking part in NEXUS-NY was well spent says Hamilton. “I’m a huge fan of NEXUS and not just because I’m a mentor for the program. There are a lot of people involved who have a lot of experience creating companies, and the teams get to work closely with them. They dig in and really help the team ask the right questions: Do customers care about the product? Is it the right time to start a company based on the product? If it is, what kind of team is needed to run the company? How should the company be structured? All the things that go into starting a new company. They don’t just give a team advice on their PowerPoint; they help them make it.”