Learning lessons and building Biotech 2.0
The following post was contributed by Ron Shigeta and the team over at IndieBio, an exciting incubator/accelerator with locations in Cork, Ireland and San Francisco, CA. We love what they are doing to promote synthetic biology and help companies successfully commercialize incredible new technology. That said, it’s important to note that PLOS does not have a formal relationship with IndieBio or its startup tenants. Interested in learning more about IndieBio, or applying for their accelerator program? Check them out at Indie.Bio
Translational Science and Biotech 2.0
IndieBio is a unique experiment to understand how to build biotech startups cheaper, faster and with a higher percentage of success. We built an accelerator that gives seed funding (now $250k) to each company and helps them transform projects into businesses. As CSO of IndieBio, I’ve had a unique look into a dozen biotech startups going from minimal product to shipping and booking revenue. We have learned that an astonishing number of long-held beliefs about building biotech companies are simply no longer true. It’s a new class of biotechnology companies we’re calling Biotech 2.0.
Here are some of the lessons we’ve learned:
Biotech 2.0 can sell to new markets
The applications for both our current and next class have had fantastic variety in their markets from all over the globe. It spoke to us that working scientists and students are already envisioning a more sustainable world where biology plays a big role. There are opportunities in pharma, diagnostics and petrochem, but we don’t have to limit ourselves. Open biotech hardware, food, and textiles; practically any consumer market is accessible to Biotech 2.0 companies. Companies that connect directly to consumers will also connect more directly to revenue, making their own money with fewer investments and grants.
Technology is not Product
To scientists, this one sounds counterintuitive. A typical mindset is: “I have a technology that is cheaper than a petrochem company that makes the same thing, so that technology is my product.”
Engaging customers, knowing what they want and what they pay for, changes a company and its prospects completely. While this approach can work, it is often not the best way to set up a market for a technology. ‘Race to the bottom’ margins, where products are produced more cheaply than traditional processes can turn into losses with a bump in feedstock costs or a drop in oil prices, and investors know this well. A reasonable improvement in product quality can solidify margins of price vs cost and transform a margin cutter into a strong company.
This is a key strategy of tech startups, but how does it work with molecular biology? Rather than build a perfect process in R&D and predict the startup trajectory, it is better to create the company holistically. Engaging customers, the scaling processes, defining the product all while doing technology development creates a stronger company in less time.
Perhaps all of the teams in our program had at least one significant technical plan change, but this is to be expected. Integrated, small-scale experiments performed in parallel with the business plan have brought us to the point where almost the entire class have a working prototype that they can hold in their hands and show to investors.
High End Tech does not always mean a better company
Sophisticated or cutting edge technology can make a product cheaper, more reliable, or increase performance. But overall, companies with technical plans that were fairly simple did better.
Simple SynBio projects, such as pathways with just one or two enzymes, already make up the vast majority of successful products in biotech and there is little risk that such a company won’t produce something useful.
‘Will it work?’ and ‘Will people buy it?’ are questions to ask before ‘How cutting edge is the technology?’
Translating to investors and customers is a critical skill
Learning to communicate to the people you need to work with is vital to gaining access to markets and investment. Having a mentor network in place like the one at IndieBio that includes technical experts, investors, business development and marketing veterans, helps tremendously in getting companies to become much more convincing.
If I could show the progress in the ability of scientific founders to communicate the value of their product from first week to what we’re seeing now, the differences would be striking!
This new generation of next generation biotech companies are creating products that are embedded into our everyday lives. There is a good deal more public interest in the field, in no small part because investors can understand the business thoroughly.
The past few months have shown that biologists can build incredible companies with products that have the potential to change the world the world for the better.
Follow us at IndieBio on Twitter: @indbio
Apply for the Fall 2015 class (early application deadline is June 30th 2015)
If you’d like to see what our companies have been up to, the live feed of our first class’s Demo Day, will be available on YouTube on June 11 at 3 p.m. Pacific Time
Originally published at synbio.staging.plos.org on June 3, 2015.