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Biotech entrepreneur Dinger lists rules for startup success
August 28, 2013

By David Hendricks, San Antonio Express-News

Biotechnology serial entrepreneur Fred Dinger spoke at Tuesday's quarterly Emerging Venture Pipeline luncheon, the sixth one so far, all sponsored by The Texas Technology Development Center.

Dinger, it turns out, had been featured at the first Pipeline luncheon a year and one-half ago. He came back as a star on Tuesday because of what happened July 1.

Dinger's third company, ENTrigue Surgical Inc., sold that day to Austin-based Arthro-Care Corp. for $45 million in cash plus a portion of sales growth over the next five years, an event that made ENTrigue investors quite happy.

Dinger successfully sold his first two companies, too, after starting his career doing research and development for Honeywell International Inc.

OsteoBiologics Inc., an orthopedic implants company, sold to Boston division of London-based Smith & Nephew PLC. C2M, standing for Concept to Market, which makes a rotator cuff for shoulder repair, sold to a French company, Tornier, now based in the United States.

What are the secrets to Dinger's success? He listed his 10 rules for the 200 people at Tuesday's luncheon. Money is not the biggest factor.

  • Start with a great core team. An "A" team with a "C" technology is better than a "C" team with an "A" technology, Dinger said. Ten of ENTrigue's 18 employees had worked together before at Dinger companies. 
  • Always build value. One way is to know what not to do, Dinger said. ENTrigue knew, for example, to concentrate on its sinus-surgery tools, not manufacturing them. 
  • Be capital-efficient. "Don't spend money like drunken sailors," Dinger said. 
  • Constantly innovate. Investors are not interested in "me-too" companies, he said. 
  • Simplify everything, especially product design. If a new medical product cannot be described to a doctor in five minutes, it's too complicated, Dinger said. 
  • Raise smart money. Obtain investments from people who have experience in the company's field, Dinger advised. "They can help with guidance ." 
  • Understand momentum. "You have to move faster than other people in the field," Dinger said. 
  • Begin with the end in mind. In other words, know who can buy the company when it's ready and why, he said. ArthroCare was one of five biotech companies ENTrigue thought might be a purchaser. ArthroCare also had been a buyer of ENTrigue's surgical tools and knew their value. 
  • Get real. Don't overinflate earnings projections to investors, Dinger warned. "Startup company sales are difficult," he said.
  • Cast a big shadow. ENTrigue had 18 employees, but the company made itself seem bigger to its customers, he said, through large, splashy booths at trade shows.


"He (Dinger) knew what he was doing," said Joe McKinney, vice chairman of Broadway Bank, which provided financial services to ENTrigue, after the luncheon.

Dinger said he will concentrate during the next six months on the transition of ENTrigue to ArthroCare, after which he will decide whether to take a position with Arthro-Care or start another company.

McKinney knows what Dinger has meant to San Antonio, especially in terms of creating wealth and good-paying jobs. "Having an entrepreneur who has done it and has been successful, you can't put a price on it," McKinney said.

 

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