Tech startup improves with age

THE archetypal image of a successful tech entrepreneur is a 20-something maverick who brings breakthrough thinking to an established industry.

The likes of Bill Gates and Mark Zuckerberg in the US, or Melanie Perkins and Cliff Obrecht in Australia, who all started in their 20s, seem to bear out this view.

Yet a comprehensive study, led by researchers from the famed Massachusetts Institute of Technology and published in the American Economic Review, has found evidence to the contrary.

“Our primary finding is that successful entrepreneurs are middle-aged, not young,” the study concluded.

“We find no evidence to suggest that founders in their twenties are especially likely to succeed.

“Rather, all evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged.”

For the rare unicorns – new ventures that achieve one in 1,000 highest growth – the mean age for their founders was 45.

The study also found that the ‘batting average’ for creating successful firms rises dramatically with age.

A 50-year-old founder is almost twice as likely to achieve ‘upper tail’ growth than a 30-year-old founder, while founders in their early 20s have the lowest likelihood of success.

Paul Watt was very pleased, and somewhat relieved, when he recently discovered this study because it confirmed what he had observed in the market.

“Certainly, in my experience in the biotech and medtech field, some of the most prolific founders of very successful ventures are not young,” Dr Watt said.

“They have made mistakes and they are determined to not make them again.” Dr Watt hopes his latest venture confirms the findings of the MIT study.

He is one of the 50-something group that established medtech startup Avicena Systems.

It’s still early days, but their achievements to date seem to bear out the research. Avicena was established two years ago.

The West Perth company ticked off another big achievement this month when the Therapeutic Goods Administration approved its diagnostic technology.

The Avicena Sentinel is a fully automated laboratory instrument for running diagnostic assays.

The company’s initial focus has been on using this technology to develop a highly scalable, low-cost and accurate screening system for COVID.

Results so far are highly encouraging, as its tests are rapid, like RATs, while being accurate like PCR tests but at a lower cost.

Using saliva or nasal samples, the Sentinel can process up to 100,000 samples daily, with results available within 30 minutes.

Features include automated scanning of bar codes on each saliva capsule to ensure efficient processing while ensuring the privacy of each registered patient.

While Avicena is targeting immediate business in large-scale screening for the mining and aged care sectors, Dr Watt said the company was pursuing a big opportunity.

“COVID catalysed the concept, but the business was never just about COVID,” he said.

“Our original business plan was focused on a universal biosecurity platform that was truly saleable that can be adapted to new threats as they arise.

“The great thing about the chemistry we are using, which is called LAMP, it can [be] adapted to new threats rapidly.”

Dr Watt believes governments and industry around the world are prepared to invest in finding effective solutions to pandemic threats.

“Governments are learning from their COVID experience and want to ensure they are not caught off guard next time,” he said.

The company’s potential market – defined as molecular assay diagnostics – is estimated to be worth about $US20 billion.

Leadership Avicena’s three founders are all serial entrepreneurs.

Dr Watt’s experience includes leading ASX company Phylogica (now PYC Therapeutics) and being a co-founder of Clinical Cell Culture (now Avita Therapeutics), as well as senior research roles at Telethon Kids Institute.

Paul Ostergaard has established several technology companies, including ASX firm Norwood Systems, while Tony Fitzgerald has been a director of several ASX companies in the biotech space including Regenera and Resonance Health.

The three founders loosely knew each other but had not worked closely together.

“None of us had regularly worked with each other,” Dr Watt told Business News.

“It was a coincidence that I was looking at the LAMP technology, the chemistry, when Paul was looking at engineering solutions in this area.”

They were joined early on by Mark Sheridan, who brought diverse experience to Avicena, including as chief operating officer at ASX-listed robotics company FBR.

He has also been director of engineering operations with General Motors Holden in Melbourne.

As chief operating officer, his responsibilities include building production systems so Avicena can move into volume production of its Sentinel machines.

The company operates from the old Singer sewing machine factory in West Perth.

The leadership group at Avicena also includes non-executive director Charlie Kemp, who has a background in control systems engineering.

Dr Watt said this group had drawn from past experiences.

“We’ve had some successes but also a few challenges that have taught us lessons about what is achievable and that also makes us more humble about what we are capable of,” he said.

“Once you understand what you can achieve alone, it makes you more anxious to fill those gaps by recruiting people or partnering with others.”

They have also learned lessons about working as a group.

“It’s about having an aligned goal and good communication. Having robust communications is also really important.”

Dr Watt said Avicena’s leadership had helped the company hire good talent, with its staff numbers growing to 34.

“One of the advantages we have is a bit of a network, that has helped us get people, but we’ve also been very lucky,” he said.

“We’ve advertised for some roles, but a lot of people have come to us.”

Another big factor in Avicena’s success to date was its capacity to bring together people with diverse skills, he said. These included molecular biologists, software engineers, mechanical engineers, opto-electrical engineers and chemists.

“We’ve been very fortunate in being able to recruit some superstars with track records of innovation,” Dr Watt said.

“It’s been the combination between those skill sets that’s been so valuable.”

Other aspects of the company’s success include quality systems, regulatory approval processes and efficient procurement.

“In a fast-growing business like this in the middle of COVID, it’s incredibly valuable to have people who really understand procurement,” Dr Watt said.

“Getting the parts on time is utterly important.”

The company has raised a modest amount of money considering its achievements.

It has secured $9 million from private investors while also gaining about $3.6 million in state and federal government grants.

Dr Watt said Avicena was evaluating further funding opportunities to support its planned expansion overseas.

“Right now, we’re looking at opportunities with institutional investors because we’ve proven the concept,” he said.

This would help the company accelerate its expansion overseas, typically through joint ventures.

Dr Watt said the company’s focus was on developing its intellectual property and securing regulatory approvals that would make it hard for competitors to enter the market.

As well as the TGA authorisation in Australia, the company is set this month to submit a key regulatory application in the UK to validate its technology.

Dr Watt said these steps would create value and provide opportunities for investors, which could range from an IPO to a trade sale or partnering with a strategic investor, for instance with a large pathology group.

“I think the companies that are most successful focus on their value-add and partner with other companies that can complement them,” he said.

“That is certainly our strategy, to partner with collection services and pathology providers.”