Building a Spin-Out Business with Tony McEnroe

The current business landscape is one of protracted uncertainty, with ongoing lockdown restrictions continuing to keep doors closed on offices across Europe. However, many instalments of ProfileTree’s Business Leader Series feature prominent entrepreneurs who have immersed themselves in med-tech, disease research and drug discovery, highlighting the strength of Ireland’s homegrown talent.

In a pre-lockdown interview, we sat down with Tony McEnroe, whose company specialises in technology that produces high-resolution images of the internal structure of biological cells. Check it out!

As we kick off our discussion, Tony McEnroe introduces himself and his business, SiriusXT. The firm has developed a revolutionary soft x-ray microscope which promises to assist those working in disease research and drug discovery. “It can generate high-resolution images of the internal structure of biological cells.

We sun the company out of University College Dublin, and the technology is essentially a source of very bright light. Every microscope needs a source of illumination, and soft x-rays need soft x-rays to create sound imaging. We chose Sirius as a name as it is the brightest star in the sky,” explains Tony. 

From University Research to Spin-Out Business

Tony explains that the business was spun out from UCD in late 2015, with the technical co-founders of the company developing its technology for 15 years previously as post-graduate doctors of the University’s Physics Department. “These guys are nerds – they are deep scientists who specialise in illumination.

It got to the stage where they had to spin out and allow the baby to spin out into its own company. I specialise in helping companies do this, and this is venture number 5 for me. We’ve been able to successfully build the company through venture capital as well as funding from the EU and Enterprise Ireland.”

It is highlighted that the technical group behind SiriusXT has been working on illuminative technology for the best part of two decades, developing bright light sources for a number of applications, including semiconductor lithography. “It was only by accident that they discovered an opportunity to build a microscope that could see through biological cells – and that’s not an easy thing to do,” shares Tony.

“We resolved the image thousands of times to see the structure within the cell. Being able to measure their size and shape is extremely important to cell biologists working in the likes of cancer research and Alzheimer’s research. By doing this, they can learn more about the mutations that cause some of these conditions. To be able to do that, they need to be able to see the whole cell.”

Disrupting a Niche Industry

One of the truly unique aspects of the technology is how it allows scientists to view cell structures without having to adjust any contrast. Indeed, the disruptive nature of this revolutionary microscope is one of the core elements behind its success. “Our technology is disruptive, and this sort of thing only comes along every two or three decades. Ultimately, we have an opportunity to develop a significant market share because we;’re doing something different to what’s already out there.”

Universities are directly tied to innovation, according to Tony. “I’ve been involved in a number of start-ups that have been spun out of universities, and in many cases I have been able to fully commercialise those and grow successful companies out of those technologies. The key is influencing university researchers to work on technologies that are of interest to industry.

“Industry can’t just wait for universities to come with something novel – it has to be a two-way partnership. That’s why the government has a really important role to play in being the matchmaker, introducing entrepreneurs to people inside universities to see what could be commercially viable. However, a technology on its own is no guarantee that it will be successful.”

What truly separates the work of SiriusXT from other companies across the world? Tony highlights that they are targeting a large niche market, with over 2,000 disease research organisations around the world. “It’s a very captive market. We know who our target customers are, and that’s an unusual case when compared to other start-up companies. Brand is all about reputation and being associated with quality and reliability. So, it’s about how well the product is worked and serviced, and how well the customer is supported.”

Indeed, Tony and the team at SiriusXT continue to place their focus on improving their product and its visibility amongst the industry’s most influential voices. “This technology costs us over half a million euros to make, so it’s very capital intensive. It will take several more rounds of investment before we attain profitability. For us, the key milestones in the coming year will be to start customer trials, allowing us to raise future funding to scale and grow our business.”

“By the end of 2021, the company should be hitting a growth rate of 60-70% per year. There’s no reason why we have to be in America or anywhere else – we can be a globally successful company based in Ireland.”

**Those wishing to learn more about SiriusXT can do so by visiting the company’s official website.**

Ciaran Connolly’s interview with Tony McEnroe joins ProfileTree’s Business Leader series, recently recognised with the Best Content Marketing Award for a Video Series at the inaugural Irish Content Marketing Awards. To pitch your business to take part in the series or to discover how our video production services can transform the prospects of your business, get in touch with our expert team today.

Deciding if a Spin-Out is Right for You: A Crossroads for Innovation

The entrepreneurial spirit burns bright, and sometimes, the most exciting ideas find themselves nestled within the walls of larger organizations. This is where the enticing prospect of a spin-out emerges, a chance to nurture your brainchild into an independent venture. But before diving headfirst into this exciting yet complex journey, it’s crucial to ask yourself: Is a spin-out the right path for you and your idea?

Assessing Spin-Out Fit:

Before taking the plunge, meticulously assess whether your product or idea aligns with the spin-out model. Here are some key considerations:

• Market Fit and Potential: Does your idea address a significant market need with a unique value proposition? Can it achieve sustainable growth and profitability as an independent entity?
• Strategic Alignment: Does your idea align with the parent company’s long-term goals? Or does it represent a divergent path, potentially creating friction or competition?
• Intellectual Property: Who owns the intellectual property (IP) associated with your idea? Is the parent company willing to license or transfer it to the spin-out?

Weighing the Pros and Cons:

Spinning out isn’t a one-size-fits-all solution. Evaluating the advantages and disadvantages alongside your specific circumstances is critical:

Pros:

• Freedom and Agility: Break free from corporate constraints and pursue your vision with greater autonomy and flexibility.
• Increased Ownership and Rewards: Enjoy direct ownership and the potential for greater financial rewards compared to being an employee within the larger organization.
• Attracting Talent: Build a team of passionate individuals who share your vision and can thrive in a fast-paced startup environment.

Cons:

• Resource Challenges: Secure funding, build infrastructure, and navigate operational complexities, all while lacking the established resources of a larger organization.
• Market Uncertainty: Building brand awareness and acquiring customers in a competitive landscape can be challenging and require significant resources.
• Increased Risk: Spinning out involves inherent risks associated with launching a new business, including potential failure.

Understanding Spin-Out Funding and Support:

Funding your spin-out venture requires careful planning and exploration of various options:

• Bootstrapping: Utilize personal savings, friends, and family resources to get the initial momentum.
• Angel Investors: Seek funding from individuals interested in supporting early-stage ventures.
• Venture Capital: Secure funding from VC firms specializing in your industry or technology sector.
• Government Grants and Loans: Explore potential government programs and initiatives that support spin-outs and innovation.

Remember, securing funding is often easier for spin-outs with strong market potential, a clear business plan, and a capable team.

Making the Final Decision:

Deciding to spin out is a significant decision that requires careful analysis, strategic planning, and a healthy dose of courage. By thoroughly assessing your product, evaluating the pros and cons, and understanding the funding landscape, you can make an informed choice that aligns with your goals and risk tolerance.

Remember:

• Consult with experienced advisors, mentors, and legal professionals to gain valuable insights and navigate potential pitfalls.
• Be prepared for a challenging yet rewarding journey. Spinning out requires dedication, resilience, and a passion for your vision.
• Don’t rush into the decision. Take the time to assess all options and ensure you’re prepared for the unique challenges and exciting opportunities that lie ahead.

Laying the Groundwork: Building a Strong Foundation for Your Spin-Out

So, you’ve decided that a spin-out is the right path for your innovative idea. Now comes the crucial stage of laying the groundwork, a phase that determines your future trajectory and sets the stage for a successful launch. Here are three key areas to tackle:

1. Securing Buy-In from Your Employer/University:

• Start with a Clear Vision: Clearly articulate the value proposition of your spin-out and how it aligns with the parent company’s long-term goals.
• Open Communication: Foster open dialogue with your employer or university leadership. Present your plans, address potential concerns, and emphasize the mutual benefits of a spin-out.
• Seek Mentorship: Look for internal champions within the organization who can support your vision and provide guidance throughout the process.
• Negotiate Terms: Discuss intellectual property ownership, licensing agreements, and potential collaboration opportunities to ensure a smooth transition.

2. Ensuring Intellectual Property (IP) Rights are Clear:

• Identify and Inventory: Map out all IP associated with your idea, including patents, copyrights, trademarks, and trade secrets.
• Understand Ownership: Determine who owns the IP – you, your employer/university, or a combination of both.
• Negotiate Transfer or Licensing: Negotiate fair terms for the transfer or licensing of IP to your spin-out venture. Consult with a legal professional to ensure a watertight agreement.
• Protect Your Innovation: Stay vigilant about protecting your IP throughout the development process to avoid potential legal challenges.

3. Building Your Leadership Team and Advisors:

• Identify Key Roles: Identify the essential roles needed for your spin-out, considering areas like business development, finance, marketing, and technology.
• Attract Top Talent: Seek passionate and experienced individuals who share your vision and complement your skillset. Leverage your network, industry connections, and recruitment platforms.
• Assemble Your Advisory Board: Surround yourself with seasoned advisors who can offer guidance in areas like finance, legal matters, and industry expertise.
• Build a Strong Team Culture: Foster a collaborative and supportive environment where everyone feels valued and empowered to contribute.

Remember:

• Start early: Laying the groundwork takes time and effort. Begin planning well in advance of your desired launch date.
• Be transparent and ethical: Maintain open communication and transparency with all stakeholders involved.
• Seek professional help: Don’t hesitate to seek legal and financial counsel to navigate complex issues and ensure your spin-out’s success.

By meticulously laying this foundation, you can secure buy-in, protect your intellectual property, and assemble a talented team that will propel your spin-out venture towards a thriving future. Remember, a strong foundation is essential for weathering the challenges and seizing the opportunities that lie ahead.

Developing the Business Plan: Charting Your Spin-Out’s Course to Success

With the groundwork laid, it’s time to architect the blueprint for your spin-out’s future: the business plan. This vital document serves as your roadmap, outlining your goals, strategies, and the steps to achieve them. Here are four key pillars to focus on:

1. Researching the Target Market and Competition:

• Size and Growth: Delve into the size and anticipated growth of your target market. Understand the demographics, needs, and pain points of your ideal customers.
• Competitive Landscape: Identify your key competitors, analyze their strengths and weaknesses, and differentiate your unique value proposition.
• Market Trends: Stay apprised of relevant industry trends and potential disruptors that may impact your market position.

2. Crafting Your Value Proposition and Positioning:

• Unique Selling Proposition (USP): Articulate what sets your spin-out apart. What value do you offer that your competitors don’t? What problem do you solve in a unique way?
• Brand Positioning: Define your brand identity and positioning in the market. How do you want to be perceived by your target audience?
• Messaging and Communication: Develop clear and concise messaging that resonates with your target audience and effectively communicates your value proposition.

3. Mapping Out Operational Needs and Financial Projections:

• Operational Plan: Detail your operational needs, including infrastructure, equipment, manpower, and processes required to deliver your product or service.
• Marketing and Sales Strategy: Outline your strategy for reaching your target market, acquiring customers, and driving sales. Consider online and offline channels, pricing models, and promotional tactics.
• Financial Projections: Create realistic financial projections, including revenue, expenses, cash flow, and profitability forecasts. Show potential investors and stakeholders the financial viability of your spin-out.

Remember:

• Be data-driven: Back up your plans with robust market research, financial analysis, and competitor insights.
• Stay flexible: Plan for potential contingencies and be prepared to adapt your strategy as needed.
• Keep it concise and compelling: Focus on the key elements that demonstrate the potential of your spin-out and secure stakeholder buy-in.

By meticulously crafting a comprehensive and persuasive business plan, you equip yourself with the roadmap and compass needed to navigate the exciting journey of your spin-out venture. This document will attract investors, guide your operational decisions, and ensure you stay on track towards achieving your long-term goals.

Launching and Funding Spin-Out Operations: Taking Flight with Confidence

With your groundwork laid, business plan polished, and vision etched in stone, it’s time to propel your spin-out from the runway and into the exhilarating realm of operation. This phase focuses on acquiring the resources and infrastructure needed to turn your ideas into reality. Here are three key areas to master:

1. Sourcing Seed Capital: Launching with Fuel in Your Tank

• Bootstrapping: Consider utilizing personal savings, friends and family loans, or crowdfunding platforms to generate initial capital.
• Grants and Loans: Research government grants and innovation programs geared towards supporting early-stage ventures in your industry.
• Angel Investors: Seek passionate individuals willing to invest in the potential of your idea and provide mentorship.
• Venture Capital: If your venture exhibits high-growth potential, approach venture capital firms specializing in your sector.

Remember, securing funding often hinges on a strong business plan, a compelling value proposition, and a capable team.

2. Establishing Leadership Roles and Onboarding Talent: Building Your Flight Crew

• Leadership Roles: Clearly define key leadership positions within your spin-out, considering areas like CEO, CFO, CTO, and marketing director.
• Talent Acquisition: Attract passionate and skilled individuals who complement your existing team and possess the expertise needed to fulfill your operational goals.
• Company Culture: Foster a collaborative and supportive environment where everyone feels valued and empowered to contribute to the success of the venture.

Building a strong team with complementary skills and diverse perspectives is crucial for navigating the challenges and seizing the opportunities that lie ahead.

3. Securing Space, Equipment, and Materials: Gearing Up for Takeoff

• Office and Operational Space: Secure the physical space that meets your immediate and future needs, considering cost, location, and scalability.
• Equipment and Technology: Identify and acquire the necessary equipment and technology to efficiently deliver your product or service.
• Inventory and Materials: If your business involves tangible goods, plan your initial inventory and secure reliable suppliers for sustainable sourcing.

Remember, while cost-effectiveness is important, ensure you acquire resources that meet your quality standards and support your growth trajectory.

Takeoff Tips:

• Prioritize and Phase: Launching a spin-out involves a multitude of tasks. Prioritize critical activities and consider phasing your launch to manage resources effectively.
• Seek Mentorship: Leverage the advice and guidance of experienced mentors and advisors who have navigated the spin-out process.
• Stay Agile: Be prepared to adapt your plans and make adjustments as you learn and encounter unforeseen challenges.

By securing funding, assembling a stellar team, and setting up your operational infrastructure, you equip your spin-out with the fuel, crew, and equipment needed for a successful launch and sustained flight. Remember, taking off is just the beginning of the journey. Embrace the challenges, celebrate the milestones, and stay focused on your vision as you navigate the skies of entrepreneurial success.

Transitioning to Independence: Charting Your Spin-Out’s Course as a Standalone Entity

Having launched your spin-out with a bang, you now stand at the precipice of a critical milestone: transitioning to complete independence. This final stage involves refining your relationship with the parent organization, solidifying your legal and financial infrastructure, and implementing robust growth strategies for your newly autonomous venture.

1. Defining Your Relationship with the Parent Organization:

• Collaboration or Competition?: Clearly define your ongoing relationship with the parent company. Will you collaborate on specific projects? Or will you be competitors in the same market?
• Intellectual Property Agreements: Ensure clear agreements regarding IP ownership and licensing rights to avoid future disputes.
• Exit Strategy: If future integration or acquisition is a possibility, outline clear terms and conditions for both parties.

2. Setting Up Your Legal Structure, IP Ownership, and Payroll:

• Legal Entity: Choose the appropriate legal structure for your business, considering factors like liability, taxes, and growth potential.
• Intellectual Property Ownership: Ensure all IP associated with your product or service is clearly documented and legally protected.
• Payroll and Taxation: Set up payroll systems, comply with tax regulations, and secure necessary business licenses and permits.

3. Implementing Growth Strategies as a Standalone Entity:

• Marketing and Sales: Refine your marketing and sales strategies to reach your target audience and acquire new customers independently.
• Building Partnerships: Consider strategic partnerships with complementary businesses to expand your reach and access resources.
• Scaling Operations: Plan for future growth by identifying potential bottlenecks and proactively expanding your team, infrastructure, and operational capacity.

Key Success Factors for Spin-Outs: Igniting the Flames of Entrepreneurial Triumph

Launching a spin-out might seem like taking a daring leap into the unknown, but like any venture, success hinges on specific, actionable factors. These pillars form the bedrock of a thriving spin-out, guiding its trajectory and propelling it towards a bright future. Let’s explore the key ingredients for a successful spin-out journey:

1. The Triple Threat: Talent, Culture, and a Vision:

• Talent Acquisition: Assembling a rockstar team is paramount. Recruit passionate, skilled individuals who complement each other and embody the values of your company culture.
• Cultivating a Winning Culture: Foster a collaborative, supportive, and innovative environment where everyone feels valued and empowered to contribute their unique talents.
• A Clear and Compelling Vision: Articulate a crystal-clear vision that excites your team, resonates with your target audience, and serves as a compass throughout your journey.

2. Leveraging the Parent’s Legacy:

• Reputation and Credibility: Leverage the parent organization’s established reputation and network to gain trust and credibility with clients, investors, and partners.
• Collaboration and Support: Seek mutually beneficial collaboration opportunities with the parent company, such as access to resources, expertise, or shared infrastructure.
• Strategic Distance: While leveraging the parent’s strengths, maintain a defined distance to build your own unique brand identity and avoid dependence.

3. Maintaining Momentum and Resilience:

• Execution is Key: Translate your vision into concrete action plans, set measurable goals, and diligently execute your strategies.
• Embrace the Grind: Be prepared for the inevitable challenges and setbacks. Develop a resilient mindset, adapt to changing circumstances, and learn from your mistakes.
• Celebrate Milestones: Acknowledge and celebrate both big and small achievements to keep your team motivated and engaged in the pursuit of your long-term goals.

Building a Spin-Out Business: FAQs and Conclusion

FAQs:

• What are the biggest challenges faced by spin-out businesses? Securing funding, building a talented team, transitioning from the parent organization, and establishing brand identity are common challenges. However, with careful planning and execution, these can be overcome.
• What are the different funding options available for spin-outs? Bootstrapping, angel investors, venture capital, government grants, and loans are all potential sources of funding. Explore various options and choose the one that best fits your needs and business model.
• What are the key legal considerations for starting a spin-out? Intellectual property ownership, legal structure, contractual agreements with the parent organization, and payroll and taxation all require careful attention and professional guidance.
• What are some success stories of spin-out businesses? Google Fiber, PayPal, Skype, and Dropbox are just a few examples of successful spin-outs that have become industry leaders. Learn from their journey and apply their strategies to your own venture.
• How can I get started with building a spin-out business? Start by researching your target market, developing a detailed business plan, assembling a strong team, and securing funding. Seek mentorship from experienced entrepreneurs and advisors, and be prepared to adapt and learn as you go.

Conclusion:

Building a spin-out business is a challenging yet rewarding journey. It requires a blend of creativity, strategic thinking, resilience, and unwavering passion. By focusing on the key ingredients of talent, culture, a clear vision, and the ability to leverage your parent organization’s strengths, you can set your spin-out on a path to success.

Remember, the landscape is constantly evolving, so embrace adaptability, celebrate milestones, and never lose sight of the “why” behind your venture. With unwavering dedication and a commitment to excellence, your spin-out can carve its own unique path and become a leading light in the world of innovation.