Getting Started as an Entrepreneur/Money/Profile: Waiting a While
Waiting a While for the Payoff: Insitutec
[edit | edit source]High-tech bootstrapping
Imagine trying to bootstrap a company that makes industrial positioning and measuring systems with nanoscale resolution. Sound tough? It’s exactly what Shane and Bethany Woody, co-founders of Charlotte-based InsituTec, Inc., have been doing since incorporating in 2001.
Shane, a University of North Carolina at Charlotte mechanical engineering PhD candidate, first started working on industrial measuring systems to meet a need articulated by Boeing. Shane studies and works at the Center for Precision Metrology at UNCC, which brings in corporations that have specific needs they want addressed by university researchers. Boeing’s military and commercial aircraft have millions of small rivet holes; at the time they contacted Shane they measured the holes by transferring samples to a metrology laboratory: a slow, expensive, and time-consuming process. Boeing needed a faster, cheaper way to measure the size and form of the holes in real time. Shane met the challenge, designing a prototype of a vector-based probe that would allow the measuring to take place within the manufacturing process itself, with comparable accuracy and at a lower cost. Timing was bad, however, as the economy went on a downswing—Boeing pulled out.
But the technology was too promising to leave behind. In 2001 Shane won Advanced E-Team funding from the NCIIA to optimize the probe and move toward commercialization, and the team officially incorporated as InsituTec, Inc. Bootstrapping began.
How have they done it? According to Shane, the most important factor in InsituTec’s high-tech bootstrapping success has been their incubator. The Office of Technology Transfer at UNCC provides high-tech startups with office space and access to laboratory equipment based on a fixed-fee agreement in which they pay based on what facilities and office space they use. Since both Bethany and Shane are graduate students they receive free office space; they’re charged only for InsituTec-related use of university equipment. And that equipment is extremely expensive.
“One of the instruments we use to test our devices costs about sixty to eighty thousand dollars,” says Shane. “That’s why without the incubator InsituTec wouldn’t really be possible.”
“If it wasn’t for the university incubator program we would have no hope of even having this company right now,” adds Bethany. “That we pay for the equipment on an hourly basis instead of having to buy it is absolutely invaluable.”
The second major factor in their bootstrapping success is salary. That is, the big salaries they don’t pay themselves. Shane pays himself far less than what the typical engineering graduate makes. “I make a tiny fraction of what I could be paying myself,” he says. “But we just have to do that right now.”
Bethany works for no pay. She has a second job that pays the bills and offers her services to InsituTec at no cost. “My time is free to the company,” she says. “I get paid at my regular job and then I spend my afternoons, evenings, and weekends working on InsituTec. We’re in this to build the company and be successful, so a little sacrifice now for success later is worth it to us.”
Another source of savings comes in the form of materials used in making the devices themselves. Says Bethany, “We spend every penny wisely. When we put together systems and devices we pinch every penny and do it cheaper and leaner than bigger companies. We watch everything we order. We look for the best deals. If we can get something two dollars cheaper elsewhere, we take it.”
If all goes well, they’ll be out of bootstrapping mode in a year. “Four months ago we received a Phase I SBIR grant,” says Shane. “We’re writing several proposals for other grants. We’re working on a development contract with a large industrial equipment company. We’re getting there.”
In the meantime Bethany offers some advice to young student inventors who may be facing years of tough bootstrapping: “If you have a company and you have a stake in it you should be willing to sacrifice early on. Don’t expect to pay yourself top dollar and succeed. If everything works out, you’ll get a big payoff later.”
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