How Hubert Zajicek Jump-Starts Companies
At the North Texas Enterprise Center, the former physician identifies promising businesses in the life-sciences space.
It was 2011, and entrepreneur Cyndi Nickel was in search of a business incubator. Her Austin-based biotech firm DxUpClose, founded in 2009, was using lab space at Texas State University in San Marcos. It was time to get out from under the university’s wings, but Nickel needed easy access to a sophisticated laboratory.
Representing an early-stage venture still in the development phase of its product, she wasn’t ready to go out and build her own lab. In her search, Nickel heard about the North Texas Enterprise Center and met NTEC’s Hubert Zajicek, the center’s managing director-medical technology.
Zajicek encouraged Nickel to apply to present at MedVentures, a regional, early-stage investment conference focused on the rapidly growing medical technology sector. She did, and was accepted. Her presentation at the conference led to funding from angel investors. By March, Nickel had moved out of TSU’s lab and into NTEC’s operation in Frisco.
“NTEC has a great facility,” Nickel says. “The wet lab space is very nice. I needed a BSL 2 lab, a level that allows the handling of hazardous bacteria. They did the things they needed to do to turn the lab into a BSL 2. They put some investment into having us come to the incubator.”
NTEC also had some of the expensive electronic equipment required for DxUpClose’s R&D, plus a machine shop decked out with all the tools needed for making prototypes.
To top things off, Zajicek’s medical background gave DxUpClose access to expert advice it couldn’t get at other business accelerators. The company does antibiotic resistance testing. Its test is quick—just one hour to test for antibiotic resistance, compared to the standard test now that takes 12 to 48 hours.
And, since DxUpClose’s initial target market is urinary tract infections, Zajicek’s background in nephrology—the study of kidneys—made for a perfect fit.
Like many North Texas entrepreneurs, Nickel had discovered the unique talents of Zajicek, 42, a medical doctor-turned-business promoter with a knack for spotting the promise in fledgling companies. Those talents are more valuable than ever, as Dallas-Fort Worth continues it years-long quest to become a force to be reckoned with in the life-sciences space.
Formative Years: Hubert Zajicek grew up in Vienna, Austria—a happy and content child, the eldest of his father Peter and mother Gerda Zajicek’s four children.
Medicine was in the family’s DNA. Zajicek’s grandfather and father both were doctors. His father worked as a hospitalist—a role now taking on increased emphasis in the U.S. Hospitalists, who are based within hospitals, focus on acutely ill patients rather than run their own medical practices.
Zajicek’s father, a cardiologist, specialized in treating complicated arrhythmias. But Peter Zajicek was a hybrid of sorts as he also had a separate private practice and made house calls. Hubert, as a youth, often accompanied him on those calls.
“It had a real neighborhood type of feel. When my dad was on vacation or gone, I’d get calls from his patients,” he recalls.
Zajicek says he always wanted to be a doctor, and assumed that someday he’d take over his father’s practice. To reach that goal, he attended medical school in Vienna, then accepted a post-doctorate fellowship at The University of Texas Southwestern Medical Center in Dallas.
Before all that, though, he fell in love with an American girl from Tyler, which was the key reason for his eventual immigration to the states.
At age 18, Zajicek participated in a summer Rotary International exchange program and became smitten with Beth McNally. With both parents’ blessings, they managed to see each other over summer and Christmas vacations, and Beth spent her junior year of college abroad in Vienna. In an against-all-odds story, the two carried on a long-distance relationship for about eight years before getting married.
They made a pact that whomever completed medical school first would go join the other in their country. Zajicek finished first.
The two married in 1995 and, after graduating from medical school in Vienna, Zajicek arrived at UTSW a year later to do his fellowship.
Change in Direction: Zajicek decided to specialize in nephrology, an interest he developed in medical school. Within a year at UTSW, he became a National Institutes of Health fellow, with his research and salary funded through an NIH grant. In 2002, he joined the medical school’s faculty.
After receiving his second grant, however, Zajicek began to look inward, thinking about his future career path. “I was looking back on my first five years. I had chosen a pure research path. … In essence it’s very unlikely you will see your actual research ever having an impact on patients,” he says. “It takes a very long time, and it may or may not happen.”
But as a physician, Zajicek wanted to see that impact. He wanted to find a way to get closer to patients. “I’ve always had an interest in commercializing things,” he says. “I always had that in me.”
Ultimately, Zajicek decided he needed a good business education with a “proper MBA.” So he enrolled in night classes at Southern Methodist University. He had no undergraduate degree in business. No accounting 101 experience. He hadn’t taken calculus since high school, some 10 years earlier.
He felt like every step was harder for him, but he loved every minute of it. About a year and a half into the program, he learned about NTEC—now one of about a dozen local business incubators—and signed on as a volunteer scientific adviser.
“It was an opportunity to see startups and explore that world,” he says.After graduating with his MBA in 2006, Zajicek joined NTEC that November and became its managing director of medical technology in 2011.
The NTEC Connection: Zajicek joined the incubator at the same time it was preparing to expand. By October 2008, NTEC had moved out of 10,000 square feet of provided office space into its own, 50,000-square-foot building in Frisco.
The incubator went from a dozen offices to 80 offices and from having only a dry lab to 10,000 square feet of wet lab space. It also added thousands of dollars worth of common-use medical technology equipment and a machine shop for making prototypes.
NTEC markets itself to entrepreneurs on its flexibility to allow them to grow or contract as needed. Entrepreneur Clark Terrill is a case in point.
For Terrill, NTEC had the ability to help his early-stage firm reach the next level of growth.
“It was around 2006, and we decided we needed growth capital,” says Terrill, a Plano native who with his father had bootstrapped MDConnection, then a California-based company marketing Web-based management technology to physician groups.
“We were doing well, but weren’t cash-flow-positive yet,” he says. “At the time, we were strictly self-funded. We reached out to friends to ask who could help us, and we were introduced to Larry Calton [NTEC’s executive director] and Hubert.”
After meeting Calton and Zajicek and making a presentation to the board, MDConnection was accepted into the incubator, where it had access to affordable rent and a company adviser: Zajicek.
The first thing NTEC did was help the startup form a company board. Using Zajicek’s Rolodex, they tapped people with skill sets complementary to the company. Those advisers helped MDConnection make connections with venture capitalists, write a new business plan, and prepare investor presentations.
“While we had a business plan, it was really outdated, and our strategy changed,” Terrill says. “The business plan wasn’t really adequate for what we wanted to do. Hubert helped us re-strategize and get something that would make sense for investors.”
Unfortunately, MDConnection wasn’t able to raise capital. Part of the problem: the Great Recession had hit.
“Nobody was investing. There were no deals being done,” Terrill says. “VCs were not closing their funds. We were fundraising, really, at the wrong time. But the happy side to that is it forced us to make some strategic decisions to bootstrap ourselves and get to profitability without investors, which we did thanks to Hubert’s strategy and the board he put together.”
Terrill says there’s no question that the company reached profitability faster due to NTEC’s resources, advisers, and strategic help. “We had no idea how to open those doors,” he says. “And really that was all Hubert. He was our main adviser.”
For OxySure Systems, one of NTEC’s first companies, the medical hub proved to be a perfect fit, even for the short time it was there. The company, which makes medically pure oxygen from a powder technology, moved into NTEC in early 2004 and stayed about two years. It is now housed across the street in its own facility, built with the help of incentives from the Frisco Economic Development Corp.
“For us, back then, it was a network to plug into for advice and ideas,” says Julian Ross, OxySure chairman and CEO. “We’ve maintained our relationships. I look at NTEC and how it has grown since we left. A big chunk of it is under Hubert’s leadership.”
Medventures Success: Besides his dedication to advising companies, Zajicek also has led the charge on NTEC’s successful MedVentures conference, now in its fourth year.
Mike Bartlett, an angel investor and himself an entrepreneur, attends the conference every year, often serving as a panelist. He met Zajicek while Zajicek was still a UTSW professor. Bartlett, who spent a career at Texas Instruments, was the initial chairman of the North Texas Angel Network, where he remains an active member. The group has about 55 accredited investor members who meet 10 times a year to review startups and make investments.
“Lately, probably our biggest area of investment has been in medical startups,” Bartlett says. The network has invested in a handful of NTEC companies.
Joe Cunningham, a venture capitalist and medical doctor, is another investor keeping tabs on NTEC, MedVentures, and Zajicek, whom he’s known for about nine years.
Cunningham is managing director of Sante, a VC firm based in Austin and Houston that closed its $130 million Sante II fund in December 2011. With all its investments in life sciences, Sante focuses on the middle of the country with a preference for Texas-based entrepreneurs. Sante has not yet invested in an NTEC firm, but that doesn’t keep it from maintaining close ties and continually watching for investment opportunities.
Cunningham firmly believes cities like Dallas need business incubators like NTEC to grow a life-science entrepreneurial community. Dallas, historically, has lagged behind Austin and Houston in entrepreneurship, he says, but incubators like NTEC are helping to raise DFW’s profile.
“Every city in America sees biotech as a hot area,” Cunningham says. “The ones that succeed in transforming into a hub are when they have a hit. That’s how Austin became an IT center. There is some degree of luck involved in that.”
Zajicek is circumspect about the big “hit” concept. He admits NTEC is still on the hunt for a company that makes it big after being nurtured there. But he believes DFW as a whole is well situated for medical technology growth.
“We are still chasing the elusive big hit—which could be a good thing, because, with a big hit, you can also get a big fall,” he says.
“You have to let capitalism run its course,” he adds. “Do we play a role in facilitating startups, propping them up? We are very sensitive to that. We want to help startups, but they have to raise capital based on the criteria that the market sets for them. I could help you all I want.
If the investor isn’t going to put money into you, you are not fundable.”
Nickel’s DxUpClose, meantime, is in the midst of raising $1.1 million in its Series A funds. The funding should get it through the development process into the next phase—manufacturing validation. She credits NTEC, and Zajicek, with helping quicken the company’s growth pace.
“Hubert—the blend between his research background and his business expertise—is a good thing to have in an incubator like NTEC,” Nickel says. “He understands the scientific technology, and he understands the business. When he gives advice, it always tends to be very good advice.”