The rocky path from PhD to CEO

In June 1948, reporters, government officials, and scientists gathered at the Manhattan headquarters of Bell Laboratories, the storied corporate research arm of Bell Telephone, to see a demonstration of the lab’s latest innovation, a metal cylinder about the length of a paper clip. It was a transistor.

Standing next to a supersize replica, Bell Labs’ research director inserted the device into a phone to show how it could amplify his voice. The transistor could also act as a switch or an oscillator. The lab’s internal newsletter predicted that the technology would “have far-reaching significance in electronics and electrical communication.”

That prediction proved to be accurate. The scientists who invented the technology won a Nobel Prize in Physics, and transistors became critical to the development of computers and most other modern electronics.

The transistor is still important today. Bell Labs is not.

The R&D departments at large corporations such as Bell Telephone were a major engine of innovation during the middle of the 20th century. But the innovation waned as these firms started gutting their basic research teams. When Bell Labs unveiled the transistor, it employed thousands of scientists and engineers. By 2008, only a handful remained.

Now start-up companies are trying to fill the gap left by the decay of corporate research. About 20 blocks north of the old Bell Labs headquarters, about two dozen young scientists meet twice a month to share their progress on technologies they hope will slow climate change, clean up pollution, and feed the planet’s growing population.

Most of these scientists developed their technologies during a PhD program or postdoctoral fellowship. But instead of seeking out a position at a university or an established company, they founded start-ups to try to ensure their research is used to tackle big problems.

“Real-world impact is the most important thing for me, beyond anything else,” says Sudharsan Dwaraknath, who cofounded the agricultural biotechnology start-up Quorum Bio. “I want to die knowing that people who are vulnerable and marginalized have a better quality of life because of what I did.”

Developing new technologies inside a well-financed corporate research lab was never easy, but bootstrapping a chemical or materials innovation in a lean start-up is an even more difficult journey. Scientists have to learn how to manage a team, pitch their ideas to investors, and steer their new companies through a maze of unforeseeable hazards. Shepherding a chemical technology from the lab to the market can take years of grueling work. Funding is difficult to find, and the odds of striking it rich are slim.

These obstacles discourage many scientists from turning their research into a company. But some are still willing to take them on, and they’re creating technologies that may keep Earth habitable through the 21st century and beyond.

“They’re doing it because the rest of the system is not working fast enough or well enough to solve these big systemic problems,” says Cyrus Wadia, CEO of Activate, a program that prepares scientists to lead start-up companies and hosts the biweekly meeting. “We need more scientists out there taking this path.”

Getting a start

Since cofounding the battery start-up Standard Potential, Andrew Wang begins many mornings by rolling out of bed and looking at his phone. He checks a stream of data coming from racks of batteries charging and discharging in a lab at Columbia University. “It’s this and then Twitter,” he says.

Wang’s lab space is filled with equipment used to fabricate soda can–size batteries. A glass case contains thin sheets of copper and aluminum foil smeared with black paste, the anode material that releases electrons when a battery is working. On an adjacent table, a tiny furnace roasts more battery ingredients.

Most of the batteries used in cell phones or electric cars have cathodes made with lithium. Standard Potential aims to make batteries cheaper by using inexpensive sodium-based cathodes instead. Wang helped develop the technology during a postdoctoral fellowship at the Columbia Electrochemical Energy Center. As the firm’s CEO, he’s now trying to build the business skills needed to bring the technology to market.

While at Columbia, Wang studied the economic viability of using batteries to store electricity on the power grid for hours or days. At the time, the price of lithium was skyrocketing, and he wanted to cut the cost of batteries.

The cathode is usually the costliest part of a battery, so Wang, his adviser Dan Steingart, and Richard May—another postdoctoral fellow in the lab, whom Wang met when they were both interns at Tesla—developed an inexpensive sodium-ion cathode material. In June 2023, Wang and May decided to take the leap and formally incorporated Standard Potential to commercialize the material.

Jumping from academia to a start-up can be incredibly challenging. Raymond Weitekamp, who joined the first cohort of Activate fellows and founded the polymer producer polySpectra after finishing his PhD in 2015, says earning a PhD in chemistry or engineering trains scientists to be great critical thinkers. “But there’s so much you have to unlearn,” he says.

Academic researchers are great at uncovering how the world works and presenting what they’ve learned at a conference, but Weitekamp says they often struggle to listen to potential customers and understand how to apply their science to a real-world problem. Customers won’t pay for a technology just because it’s interesting, he warns.

“Unlike baseball, there are very few people on the planet who give two shits about your research. . . . If you build it, they will most definitely not come,” reads the first installment of an email course called PhD to CEO that Weitekamp created to share some of the tough truths he’s learned as a founder.

Brenna Teigler, the chief fellowship officer at Activate, says researchers are taught to withhold judgment about ideas before seeing all the data. “That won’t work in a business,” she says. “We have to get them into a frame where they can make decisions with the information they have.”

Wang and May, who serves as Standard Potential’s chief technology officer, are already learning some of these lessons. After they created the company, the price of lithium crashed, weakening the argument for sodium-based replacements. They’ve shifted focus accordingly.

The pair first switched from trying to sell their new cathode material to selling an additive that could extend the lifespans of both lithium-ion and sodium-ion batteries. Earlier this year, they changed course again after developing a method to produce sodium-ion batteries that don’t need to be charged before leaving the factory.

This initial charge is used to improve the performance of lithium-ion batteries but requires lots of expensive equipment. Removing this step for sodium-ion batteries could reduce the cost of manufacturing so much that they make economic sense, even when the price of lithium is low, Wang argues. “There’s some truly unique aspects of the sodium chemistry itself that we’re capitalizing on,” he says.

Just like its technology, Standard Potential’s founders are a work in progress. Wang and May are seeking training to boost their business credentials and navigate shifts in the battery industry. In July, both were selected to be fellows in Activate’s New York cohort, and they joined the group’s biweekly meetings in Manhattan. The pair were also chosen for another climate tech accelerator that will start this September.

Such programs provide coaching on fundraising, running board meetings, and hiring. Some, like Activate, provide funding to help with the cash-strapped, early days of a company. Quorum’s Dwaraknath, who recently completed the Activate fellowship, says the programs also connect participants with investors and scientists who have already launched companies based on their own research.

“You have a lot more collisions with investors, with people in the ecosystem, other founders . . . people who can relate to the challenges I have,” he says.

The past 15 years have seen an explosion of fellowships and start-up accelerators designed to give academic founders the skills needed to run a business.

In 2011, a group of cleantech founders rented a warehouse near Boston to create a shared lab. The space eventually morphed into the start-up incubator Greentown Labs, which has since supported more than 500 companies. That same year, the US National Science Foundation created the Innovation Corps program, which annually helps hundreds of teams of scientists identify opportunities to commercialize their research.

In 2021, a nonprofit arm of Breakthrough Energy, which also operates a for-profit venture capital fund, launched a similar fellowship program. While not every scientist has the characteristics needed to become a CEO, researchers who are curious and coachable have the potential to be exceptional leaders, says Ashley Grosh, who leads the program. They already have a deep understanding of the technology, and they can learn how to run a business.

“They are unique,” Grosh says. “There’s some magic when people can do both.”

Buying time

Laura Stoy showed signs of that magic long before she founded Rivalia Chemical, a start-up that hopes to extract rare earth elements from the ash that coal-fired power plants produce.

While developing the company’s technology as a PhD student at the Georgia Institute of Technology’s College of Engineering, Stoy cofounded a software company called RocketJudge that helps score competitions and events, such as academic poster sessions. Stoy’s cofounder wrote the code for the program in a weekend, and it has since been used at hundreds of events.

Many venture capital firms are built to support fast-moving software companies like RocketJudge, but Stoy says launching a cleantech company like Rivalia requires patience. Rather than courting investors early on, she’s buying time to develop the technology by securing government grants.

“You want to be very wealthy in 3 years,” she says, referring to traditional venture capitalists. “I’ll potentially still be in the lab in 3 years.”

Coal ash contains toxic elements like mercury, arsenic, cadmium, and lead, making the ponds where it’s stored pollution risks for nearby waterways. But the ash also contains rare earth elements, which are used to make magnets crucial for electric motors, wind turbines, and many other products. Nearly all rare earth elements are processed and turned into magnets in China. Leaders in the US and Europe want to establish such facilities closer to home.

Rivalia leaches coal ash with an ionic liquid to produce a concentrated mixture of rare earths. The mixture must then be separated into individual elements. Today, most of the companies capable of separating the elements are in China. Rivalia is talking to a handful of start-ups, including Phoenix Tailings, that want to do the separation in the US.

Perhaps a bigger draw for Rivalia’s technology is its ability to clean up ash from active power plants and remediate old ash ponds. Stoy hopes that the ash left over from Rivalia’s process can replace some of the portland cement used to make concrete.

“We’re taking this hazardous waste material . . . [and] we’re pulling out rare earths for cleantech,” Stoy says. “And we’re going to clean up the ash ponds.”

The technology performed well during Stoy’s PhD years, but she wasn’t convinced it would succeed as a business, in part because the Chinese government subsidizes rare earth firms in the country. Instead of starting a company, she took a fellowship with the US Environmental Protection Agency, where she continued to study ways to get rare earths from waste.

Then in 2022, she stumbled across a start-up accelerator run by Techstars and Alabama Power, an electric utility with some of the biggest coal ash ponds in the US. Stoy realized that this was probably the best opportunity for her to start a business. She applied and got $120,000 in launch funds.

“If I hadn’t gotten that first funding, that first vote of confidence, I probably would have gone back to the drawing board or maybe something in policy,” she says.

The accelerator put Stoy in contact with people at utility companies who helped her understand how the technology might fit into their operations. But the program was only 3 months long, not enough time to get Rivalia off the ground in earnest.

As she wrapped up the Techstars accelerator at the end of 2022, Stoy applied for a grant through the US Small Business Innovation Research (SBIR) program and a fellowship through the US Department of Energy’s Lab-Embedded Entrepreneurship Program at Argonne National Laboratory. Both came through early this year.

The SBIR grant and Argonne fellowship provided Stoy the time to advance the technology but didn’t require her to cede a stake in her company. She says retaining ownership now will give her more power later when she starts raising money for large-scale projects.

Weitekamp says such public support is critical for scientists developing new materials or technologies that could provide major environmental benefits but won’t give private investors a quick return. “It’s not going to click as fast as a software thing. It takes a decade to bring a new material into the marketplace,” he says. “You need the stamina for that.”

Dick Co, who directs the Argonne entrepreneurship fellowship, says his program and others are helping founders take their first steps, but participants still have a long way to go once they finish. Companies that spend years working to set up pilot projects often struggle to find funding or partners for commercial-scale plants, especially when the technology is new. “How do you . . . prove it out so that a chemical company can just plug it right in?” he asks.

Stoy hopes that, over the next 2 years at Argonne, Rivalia’s technology will progress from processing a few grams of coal ash per day to tens of kilograms. She’ll need another SBIR grant to reach 500 kg per day, big enough to interest a utility company in a pilot project. Only then will she seek venture capital investment. Building a commercial-scale plant that can process thousands of metric tons of ash per day is much further down the line. “It’s going to take me a long time,” Stoy says.

Wang says he’s also prepared for a long haul. Industry leaders in China are only now starting to produce sodium-ion batteries at commercial scale. Standard Potential aims to start demonstration-scale manufacturing in the next few years. Wang hopes the demonstration plants will prove the company’s concept and open doors at large battery firms. The consulting firm CRU Group doesn’t expect to see significant demand for sodium-ion batteries until the end of the decade.

Meanwhile, Quorum is engineering microbes to improve crop growth, an approach that’s unfamiliar to most farmers. Dwaraknath says the firm will likely need to run 3 years of field trials, which means it won’t deliver the first microbe to farmers until at least 2028.

Show me the money

Dwaraknath acknowledges that Quorum’s technology is risky synthetic biology. But if it pans out, he says, the environmental benefits and financial rewards would be huge. To seize that opportunity, Dwaraknath will need a lot of money.

He started pitching Quorum to investors in September 2023. The stakes were high. He had an SBIR grant and financial support from Activate, but he estimated that the company would run out of cash by June 2024.

“This is absolutely existential,” Dwaraknath said early this year. “If we aren’t able to close the round, in a few months I have to go into cockroach mode. I have to cut our expenses and stretch our runway.”

In a shared lab space in New York City, Quorum’s small team of scientists uses a technique Dwaraknath worked on during a postdoc at Lawrence Berkeley National Laboratory to genetically engineer microbes that improve crop growth. On the company’s lab benches, pale green and yellow microbes grow in petri dishes labeled with permanent markers, and tiny corn plants sprout out of plastic envelopes filled with soil.

Quorum’s first product is a microbe that solubilizes phosphorus in the soil, making it available for plants and reducing the amount of fertilizer that farmers need. The company also wants to develop microbes that deliver other advantages, like sequestering carbon or protecting crop yield during droughts.

Dwaraknath’s meetings in 2023 were mostly with agriculture-focused investors, who are often reluctant to put money into early-stage firms. He wasn’t making much progress.

In November, a group of farmers picked Quorum to participate in AgLaunch365, an accelerator program that provides assistance for small-scale field trials. Dwaraknath also started pitching the firm to biotech and cleantech investors, who are more comfortable with new technologies. This move put wind in the fundraising sails.

Early this year, Dwaraknath cold emailed an investor at the venture firm Refactor Capital, which eventually became the first participant in the fundraising round. At the World Agri-Tech conference in San Francisco in March, Dwaraknath had a serendipitous encounter with a leader from FTW Ventures and delivered a 2 min pitch on the spot. That meeting sparked the investor’s interest, and FTW signed on soon afterward. After getting one final investor on board, Dwaraknath completed the $2 million funding round in May, just a few weeks before Quorum would have run out of money.

Quorum now has 6–12 months to get its phosphorus-solubilizing microbe ready for field trials. In addition, the company will be engineering microbes that provide other benefits so that it has products to fall back on in case the first one doesn’t pan out. If the field trials and prototype development go well, Dwaraknath will use the results to raise additional money. “Fundraising is a full-time job and then some,” he says.

Wang started talking with investors soon after founding Standard Potential, when he was aiming to manufacture cathode materials. As the company pivoted toward the new, less expensive manufacturing process for sodium-ion batteries, Wang and May thought their approach might be too risky for private investment. Like Stoy, they opted to rely on grants from governments and nonprofits like Activate.

Wang is gathering more data about the firm’s new manufacturing process and hopes he will be in a position to start raising venture capital by the end of the year. “Activate . . . allows us to take a little bit more risk on developing something truly transformative,” he says.

Investors give entrepreneurs the resources they need to bring their innovations to life, but they also bring an urgency to push out a product quickly—sometimes too quickly. And investors’ goals don’t always align with those of the founders.

Guillermo Garcia, who cofounded the materials company Heliotrope Technologies in 2012, knows from experience that new companies may be tempted to work with anyone who will write a check. “As a young entrepreneur, you’re like, ‘These guys have money. I’m going to talk to whoever I can to get it,’ ” he says. But he urges founders to seek out investors who are on the same page as them, even if it means a longer timeline or slower growth.

Heliotrope used nanomaterials to create windows that could be tinted or untinted with electricity. The technology was based on Garcia’s doctoral research at the University of California, Berkeley. Over 10 years, Garcia helped the company raise more than $50 million.

In 2021, Heliotrope was on the verge of a large investment that would have paved the way for a manufacturing facility. But a key investor backed out at the last minute, and the company went into a tailspin.

Garcia tried to keep Heliotrope and the technology intact, possibly through a sale to a larger firm. But the investors who had already waited a decade for the technology to pay off—and who now controlled the board of directors—wanted to cut their losses. They got their way. The company was dismantled, and its equipment and intellectual property were sold off piecemeal.

Looking back, Garcia says that if he had been more careful during the early stages of fundraising, he might have been able to preserve his power on the board and take Heliotrope in a different direction. “That’s all based on the need for funding,” he says.

In many ways, founding a company is a financial gamble, and Garcia’s didn’t pay off. He was able to parlay his experience into a CEO role at another start-up and says he doesn’t regret starting Heliotrope. But for many cleantech founders, a big payout isn’t a realistic expectation or their main motivation.

Stoy points out that commercializing a new chemical technology requires so much money that even the most successful cleantech companies don’t always generate huge financial rewards for their founders. “I’m hesitant to part ways with equity, not because I want to get rich, but because that’s all I have to barter,” she says.

Brain drain

The elusiveness of financial rewards, years of intense work, and huge amount of expertise needed to commercialize new technologies dissuade many scientists from founding cleantech companies. Start-ups are not an easy fix for the decline of corporate research organizations like Bell Labs.

During the 20th century, researchers at corporate labs could pluck a risky idea from academia and try to make it work. If it proved to be promising, the idea would move smoothly through a single organization that could test it, develop a working product, and manufacture at mass scale.

Today, this process is much more fragmented. Universities, start-ups, and major corporations are all specialized at their specific roles. They may be good at them, but friction arises at the handoff points, according to Deepak Hegde, a researcher at New York University who studies the role of business in scientific innovation. “The more you can do to break down these barriers, the better,” he says.

Some organizations are trying to make this happen. In addition to starting a fellowship program for early-stage founders, Breakthrough Energy created Catalyst, a program that finances companies building large cleantech projects. “We’re trying to smooth that out because Bell Labs doesn’t exist,” says Grosh, the leader of Breakthrough’s fellowship program.

While the path that drug candidates take from small research labs to large firms is well trodden, Sharon Belenzon, a business researcher at Duke University, says commercializing a chemical or materials technology is a much rougher journey. In part, Belenzon says, this is because large firms no longer have a deep bench of chemists, and they struggle to understand the innovations behind many start-ups.

For start-ups, an additional challenge is that clean technologies can be used in multiple applications, and it’s not always clear to founders which large firms they should be talking to, Hegde points out.

Standard Potential is hoping to sell batteries for stationary energy storage, but the firm must also consider companies in China that are introducing small cars powered by sodium-ion batteries. Rivalia could focus its attention on car companies and wind turbine makers that want a secure source of rare earths, or it could target utility companies that need to clean up coal ash ponds.

Thomas Åstebro, a professor of entrepreneurship at HEC Paris, says it’s getting harder to find start-up founders who deeply understand a technology and the intricacies of the industries the innovation could affect. “They still exist. There’s just fewer,” he says. “Thirty years ago, they didn’t need to have all the tech skills plus management skills that they need to have today.”

In a paper Åstebro coauthored with researchers from the University of Maryland, College Park, he found that the share of US PhDs who are starting companies has been dropping since the 1990s. This pattern holds across scientific disciplines, including chemistry. Åstebro sees accelerators that train scientists to run businesses as one way to reverse this trend. Both Åstebro and Hegde lead such programs at their universities.

Belenzon says start-ups have so far failed to match corporate labs’ ability to convert scientific ideas into useful innovations, but he doubts that companies are interested in returning to the days of Bell Labs.

Wang, Stoy, and Dwaraknath don’t want to go back to the corporate research model. They like the freedom that comes with working in their own start-up and the challenge of leading a company. And sometimes the scientists who developed a technology are the only ones who see its potential.

Before starting Rivalia, Stoy tried to persuade other companies to license the rare earth technology. After they all said no, she felt she was left with only one way forward. “We need this technology to be deployed quickly,” Stoy says. “Let’s see what I can do.”