Week 2

1. Week 2 Columbia University GSAS BIOT 4180

2. Brief review • Sources of information • PWC • E&Y • BIO • Government sites: CIA, IRS Columbia University GSAS BIOT 4180

3. 3-6 word description examples • On-off switches for genes • Outsourced cheap whole genome sequencing • Stem cell picks and shovels • Audience specific • Less toxic targeted chemotherapy • Chemo-antibody conjugates Columbia University GSAS BIOT 4180

4. Elevator Pitches Columbia University GSAS BIOT 4180

5. One minute pitch • Hook: relevant question in need of a solution • 3-5 word description • Target customer • Target customer’s specific problem • Your solution • Why you are different • Economic teaser Adapted from MARSDD.com Columbia University GSAS BIOT 4180

6. The Early Business • Idea • Identity • Entity: the need to choose a business platform • Single proprietor • Partnership • Corporation Columbia University GSAS BIOT 4180

7. The basis for determining your business form is to limit your personal liability, establish a platform to bring in partners (ie raise money) and to avoid double taxation Columbia University GSAS BIOT 4180

8. Sole Proprietorship • No division between the founder and the business • Tax pass through • No limits to liability • Upfront legal costs Columbia University GSAS BIOT 4180

9. Partnership • No division between the partners on one side and the business on the other • Tax pass through • No limits to liability • Upfront legal costs Columbia University GSAS BIOT 4180

10. Professional Corporation (PC) • Attorneys, architects, engineers, accountants, doctors • Members still have liability for their actions but not for those of their partners (somewhat simplified) • The corporation pays taxes Columbia University GSAS BIOT 4180

11. Limited Liability Company (LLC) • Hybrid between partnership and corporation • Not incorporated • Limited liability • Tax pass-through Columbia University GSAS BIOT 4180

12. Corporation (C Corp) • Limited liability • Double taxation • Oversight and administrative requirements Columbia University GSAS BIOT 4180

13. S Corporation • Limited liability • Tax pass through • Maximum number of investors • Corporations cannot invest in S Corps Columbia University GSAS BIOT 4180

14. Early Accounting • Concept of double entry • Cash in or out or receivable or payable • Asset gained or sold • Match the income or revenue for a period of time with the use of materials to create that revenue • Depreciation • Amortization • Three financial statements Columbia University GSAS BIOT 4180

15. Financial Statements • Balance sheet: point in time summary of what is owned, what is owed and what is left over for the owners • Income statement: revenue generated over a period of time matched against the expenses needed to generate the revenue • Cash flow statement: reconciliation between revenue / expenses and change in cash balances Columbia University GSAS BIOT 4180

16. Principle of Finance • Time value of money: a given sum in the future is worth less than the same sum today • Risk and uncertainty decrease the value of a sum in the future • There is a methodology for calculating the present value of a future sum • Concept of discounted cash flow Columbia University GSAS BIOT 4180

17. Capital Structure of a Company • Debt • Borrowed funds • Fixed repayment • No share in upside or success of company • Preference in liquidation of assets • Equity • Ownership stake • Different levels: preferred versus common • Variably liquid • Hybrids: Convertible debt, convertible preferred Columbia University GSAS BIOT 4180

18. Assignment • Homework assignment will be emailed to you. Columbia University GSAS BIOT 4180