Aalto-Helsinki Bioworks
Business Plan
Contents
Executive Summary
Aalto-Helsinki Bioworks applies the novel techniques of Synthetic Biology to create new solutions for modern industries utilizing bioprocesses of various kinds. We have demonstrated our expertise by developing a genetic switch in E. Coli that can be controlled with blue light, with which the user can change between three different genes of his/her own choice. Having the right genes active at the right time provides major shortcuts in reaction pathways inside bioreactors, leading to faster production, less waste, lower maintenance costs and a wide range of scientific application in both research and development.
Aalto-Helsinki Bioworks business plan and idea are based on technologies and solutions under Open Source license. We aim to offer chargeable tailoring, consultation and development services based on the free information that everyone has access to, but only our team of experts knows how to master. Developing a close, mutually beneficial relationship with all our customers is the basis of our successful business.
In the field of computer software, numerous companies, such as Red Hat and Arduino have been successful in their business having based their strategy on open source thinking. In short, this means that the source code of the program itself is freely available for everyone to use and improve. The improvements done by the users must be made available for the entire community. The revenue based around Open Source technology is created by offering consultation and implementation services.
We have concluded that the same business opportunities can be found in modern technology and science, especially in synthetic biology. Further business opportunities can be found in selling hardware and helping at customizing the systems to meet the clients’ specific needs. Our strategy involves long-term, well-maintained customer relationships, supportive and interactive community, and building on our customer base using feedback and referrals.
Synthetic biology is a fast growing field in modern scientific research. Combined with the accelerated growth of the energy market, there is a new market opportunity in biofuels. Biofuels alone have a global market of 70 billion euros and the market is estimated to have an annual growth rate of 8% to 18% by 2020. In addition to biofuels, synthetic biology has potential markets in high value biological compounds (such as pharmaceuticals) and other industrial bioprocesses involving capacious bioreactors.
These industries and their research and development sections utilize different organisms, like bacteria and algae, to reach the end product. However, bacteria perform only a single function in the process and the control over them is extremely limited, as discussed in the introduction of our Research-section. Because of the continuous need for maintenance and the need to have different organisms designed for each stage of production, bioprocesses of industrial scale are expensive to both design and maintain.
Aalto-Helsinki Bioworks’ executive team consists of talented university students with numerous fields of expertise, ranging from synthetic biology to mathematics and computer science. Our team has a strong background in both research and product development, and we aim to combine the theoretical viewpoints with engineering to create the best possible solutions for companies utilizing modern bioreactor technology. In addition, we have assembled a board of advisors to provide scientific and management expertise. This includes professors and researchers from Aalto University, University of Helsinki, VTT and Aalto Entrepreneurship Society.
At first, Aalto-Helsinki Bioworks can be sustained with public money and the support of universities. At current stage, our research does not require considerable capital investments to proceed, since we have the rights to use Aalto University’s research laboratories. We are looking for funding to cover expenses from finishing the research and development of our first technology and for its commercialization. In additon, we need funding for renting workspace and direct material costs. We are looking for connections with research teams in synthetic biology, bioprocessing technology and medicine production. We are also looking for companies and research groups to pilot our genetic switch. The pilot customers can be from any field utilizing bioreactors in their production, for example medical industry and biofuel industry, or any companies or research groups who could have use for our genetic switch.
Vision, Values and Mission Statement
Aalto-Helsinki Bioworks is the first iGEM team from Finland. It is also one of the two undergraduate teams participating in the Entrepreneurship track in the iGEM 2014 competition. In summer 2014, we graduated from Aalto Entrepreneurship Society’s Summer of Startups incubator programme. Our team consists of nine talented students from Aalto University and University of Helsinki.
Using our interdisciplinary expertise, we aim to build a company that provides new solutions and technologies using synthetic biology. This covers a vast variety of different approaches, from very special tailored solutions to generic, universal and integratable platforms.
The key values of our work are the benefits of licensing our technologies and research under an Open Source licence. We believe in BioBrick Foundation’s approach of standardizing biological parts and keeping all research open, transparent and free to use by other researchers.
Aalto-Helsinki Bioworks’ vision of Open Source Biology is defined as follows
- The technologies and solutions using synthetic biology must be freely distributable.
- The information required in order to use these technologies must be available for free.
- The distribution of derived products must be allowed.
- Individuals or groups must all have equal rights.
- Usage or purposes of technology or solution must not be limited.
- Every user has the same rights.
- License must not depend on a wider solution environment. The rights to the technology must remain the same even if it is taken away from its context of distribution.
- The license may not limit other technologies or solutions. The technology or solution must also be distributable with technologies or solutions not licensed under Open Source Biology license.
- The contents of the licence must not depend on technical realisation. The rights must not contain any conditions concerning the distribution or usage of the information needed in order to use the technology or solution.
- The derivatives of technologies or solutions may not expand the rights defined in this license. More limiting licenses are allowed.
Following this philosophy means that our solutions and technologies are free to use by the scientific community and industrial operatives. This way the whole world may profit from new scientific discoveries and at the same time, new improvements and modifications to our technologies by other parties are also at our disposal. Making our work Open Source, we can help creating a world wide community of improving, updating and sharing existing biological technologies, while at the same time building profitable business around them. In other words, we want to bring Open Source thinking to the business side of synthetic biology community in order to boost the fast development of this relatively young branch of science.
Business Strategy
a. The Business Model Canvas
b. The Timeline
c. The Management and Organization Structure
We have decided to be a flat organization, also known as a horizontal organization.
As a company, we need to have seamless communication between the researchers, developers and laboratory experts. To achieve this, we need an organization structure with as few as possible levels of middle management between staff and executives. Well-trained experts working for us will be more productive when they are directly involved in the decision-making processes.
As the decision-making process is decentralized, the flat organization model promotes employee involvement. We want to elevate the level of responsibility of our employees and have the feedback reach our personnel more quickly. This happens by eliminating layers of middle management. This also makes the response time to customer feedback quicker.
It is commonly argued that companies without middle management (e.g. GitHub before the year 2014) might suffer from problems related to the lack of workplace diversity, formation of informal cliques and the soft power of popular employees. The mentioned problems are often responsibility of human resources departments in larger organizations. We believe that these problems can be tackled by hiring one employee to focus solely on these issues.
We will have differentiation between research/development team and business/marketing team. The delayered model allows the two main branches of our organization to communicate efficiently: without middle management the essential information gets directly to the right people.
After reforming our startup crew and forming our company, we will name our former captain Oskari Vinko as our Chief Executive Officer and the head of wetlab and development. Vinko will be in charge of overseeing the organization as whole, as well as supervising our research/development team and our laboratory employees.
Minnamari Salmela will be named as Chief Laboratory Officer and she will be responsible for managing the R&D laboratory. Salmela will be responsible for overseeing development and researching new methods, as well as managing orders for reagents and laboratory equipment. Lassi Vapaakallio will be named Chief Technology Officer and will be responsible for managing our scientific and technological issues within the organization. Vapaakallio will also be responsible for Open Source documentation. Otto Lamminpää and Niklas Itänen will be in charge of modeling and mathematics behind our company’s technology. Martina Ikonen will act as organization’s leading expert on BioBricks. In addition to our original members, we are going to need at least two more employees for laboratory, two more experts for research and development and one for managing technological issues.
The business/marketing team will be responsibility of Pietu Roisko, who will be acting as the Chief Business Officer. Roisko will be responsible for managing employees around business/marketing. Mikko Laine will be named the Chief Communications Officer. Laine is responsible for social media and providing information to the media and public. Laine is also in charge of communication inside the organization and developing the community around the Open Source technologies and solutions. Laura Laakso will be named the Chief Design Officer and will be responsible for the design and appearance of our products. Laakso will also act as our art director, being in charge of Aalto-Helsinki Bioworks’ overall visual appearance. We are going to need at least two more employees to work in marketing, one to be in charge of human resources and one designer to work with Laakso.
Although we give the original members of our startup crew titles, these titles do not provide original members any additional rights compared to other employees: titles simply suggest of elevated level of responsibility on areas named previously. We are striving for a non-authoritarian workplace as well as seamless collaboration between the two teams.
d. Financials
1.Costs
- Salaries for employees, $5 000/month/person.
- $5 000/year overhead from consultation.
- The rental rate for the L1000 wetlab is $26.00 to $32.00 per square foot, depending on laboratory improvements and term of occupancy (UIC Office of Technology Management).
- $50 000 - $100 000 for laboratory equipment and machinery.
- $1 000/month for waste disposal and maintenance.
- $500/month on pipette tips, tubes, glassware, cell culture supplies, etc.
- $1 000/month Kits, reagents and entzymes.
- $1 000/month DNA synthesis.
2. Setting a Basis for Consulting Fees Using Real-Life Data
In this calculation, we will show a way to calculate profitable consultation charges based on working days per year.
We allow our employees six weeks for vacation and state holidays, this leaves us with 46 weeks. Multiplying by 40 working hours a week we have 1840 hours a year/consulting employee. However, the consultant has to spend time on other affairs than consulting: approximately 20% of time is spent on administration, running errands, paperwork, etc., another 20% on marketing, networking events, website management and 10% spent on other non-billable work, leaving 50% spent giving consultation services to customers. We are then left with 920 billable hours.
Based on the statistics of average upper-middle class experts salaries in the US, we can say that working in a standard company, our employees would earn $60,000 base salary plus $15,000 in benefits yearly, resulting in $75,000 total salary.
The overhead costs of maintaining consultation services should also be taken into consideration. This includes at least the following:
- Rent or mortgage interest
- Utilities
- Maintenance and upkeep
- Property taxes
- Internet and office supplies
- Accounting
- Legal services
- Insurances
- Meetings and conferences
- Cleaning services
Together, these can be approximated to cost $5 000/year/person.
Dividing the total salary by yearly working hours, the value of one hour is $80.
One takes a risk at running a business, so it’s reasonable to expect a profit margin on consultation fees. Consultants usually mark up their fees by 10% to 33%. Settling in the middle at 25% we will get $108.7/hour, rounding up to $110/hour ($86.95 plus 25% mark up). Consultant fees can be applied to customer visits in person, Skype sessions, etc.
The above-mentioned is the basis of our dynamic pricing system. Depending on the customers’ situation, we tailor the overall price to match each case separately.
Other aspects that affect the consultation fee:
- Number of our experts taking part in consultation.
- Scale of the customer company and the savings made using our solutions.
- Amount of outside experts and research needed to solve the addressed problems.
- Customization of hardware, e.g. a scaled version of our LED rig, apparatus for illuminating bioreactors with blue and red light.
- DNA implementation for companies.
- Updating the customers’ technologies to the latest version.
Opportunity Analysis
In modern biological production of medicine and biofuels, different kinds of bacteria, archaea, algae and eukaryotes, such as yeast and mammalian cells, are being used in production of industrial scale. These methods are used at a growing rate instead of traditional chemical methods. This way production pathways based on novel starting ingredients, such as waste, can be discovered and the whole process can be made environmentally friendly. However, most of such processes take place in bioreactors and require many different steps, several bioreactors and a variety of organisms in order to produce the desired end product. This is due to the fact that the bacteria are able to perform only a single function in a multi-step process.
We are taking advantage of the current situation and solving these problems for the industry with our work in iGEM 2014 competition: a light controlled gene switch mechanism with which the user can switch between any three genes. This way, a single strain of bacteria could perform the functions of three different bacteria. With our technology, the need to isolate and purify certain intermediate products between reactions is eliminated, and more steps of the process can be carried out in a single bioreactor. This leads to considerable monetary savings due to faster reaction speed, less cleaning and other maintenance, and reduction in reagents used and amount of bioreactors required. We enable nearly real-time spatiotemporal control over production organisms' gene expression which open new possibilities for production optimization and form a base for new applications.
We see multiple ways of doing business with our solution. Our team has the expertise to design and implement the desired genes to our customers’ bacterial strain. The implementation of blue light control devices can be done by our experts and we can help our customers to estimate the total savings made with our system. While offering the information needed to use the initial technology for free, the consultation services around our technologies and solutions along with customized hardware for bioreactors is the basis of our monetary revenue structure.
As we are Open Source, our company’s technology is constantly being updated by researchers and other users, getting better with each iteration and update. All users benefit from improvements and new features, as submission of improvements are required in the original license. As we are in charge of the Open Source documentation, we can easily manage all the data available and come up with new solutions as opportunities emerge.
Market
Biofuels, Medicine, Research and Bioprocessing in general form a huge market for new technologies that enable savings in production processes. Biofuels alone have a global market of over $70 billion and the market is estimated to have an annual growth rate of 8% to 18% by 2020. According to Report by the IMS Institute for Healthcare Informatics, the total global spending on pharmaceuticals will reach about $1.2 trillion in 2017, an increase of $205-235 billion from 2012. These are rapidly growing fields that require constantly more factories, reagents and extensive research. Any method that can significantly reduce the production costs and makes research and development faster is very likely to arise interest on the market.
Basic and applied research in academic life sciences is one of the fastest growing fields in science. The R&D Magazine's official estimates show a steady growth on global investments from 184,2 billion US $ in 2011 to 201,3 billion US $ with the USA investing 92,6 billion in 2014.
Despite the growing amount of basic knowledge, researchers still construct a new method for silencing and activating genes for each experiment separately.
With Aalto-Helsinki Bioworks’ Gene Switch, any three genes can be implemented and controlled easily, leaving the researchers free to concentrate in the actual research. Our technology is fully compatible with iGEM-foundations BioBrick standard, so it can be used with a rapidly developing database of different parts and mechanisms. Combined with our Open Source concept, all the scientists using our technology always get the latest updates and instructions on how to best utilize the new improvements. Having a wide scientific community using the technology under Open Source license also assures that we and our customers have access to latest upgrades by academics
Biofuel industry has recently been a field of substantial growth. The increasing awareness on environmental issues created by traditional fuels such as coal and oil has accelerated the investments and research in alternative, eco-friendly ways to produce fuels. As with academic researchers, these companies would have significant benefits using our technologies. The most potential customers on this field include:
DuPont: Pioneer, Biofuel, and Bioscience departments. DuPont is one of the leading corporations in chemical industries. They emphasize on finding solutions in both resource production and the biofuel itself. With over 70,000 employees worldwide, their annual revenue is US$ 34.812 billion (2012).
Algenol: a company developing a process to produce ethanol and high-value organic green-chemicals directly from carbon dioxide, water, sunlight and its modified algae. Their process uses hybrid algae to produce ethanol from carbon dioxide, water and sunlight. It claim its process can produce 6,000 US gallons per acre per year, which is 16 times the ethanol yield per acre that can be achieved from corn and well over six times the best ethanol production yields from sugar cane.
Amyris: a synthetic biology biofuel company that is positioning itself to become a leading provider of renewable specialty chemicals and transportation fuels worldwide. Currently the company has between 300 and 350 employees. Amyris has developed genetic engineering and screening technologies that enables them to modify the way microorganisms, or microbes, process sugar and use them as living factories in established fermentation processes to convert plant-sourced sugars into the desired target molecules. Their IPO was on 9/27/10 and their current (7/2011) market cap is hovering around $1.3 billion. The company has been trading in the $30 range.
Gevo: a renewable chemicals and advanced biofuels company. It is developing biology based alternatives to petroleum-based products using a combination of synthetic biology and chemistry. Using technology that can convert waste and other cellulosic feedstocks into alternative fuels like butanol, it is now moving to begin its first joint venture to produce isobutanol, a versatile platform chemical for the liquid fuels and petrochemicals markets. NASDAQ (GEVO) had 6/2011 price of around $15 and a market cap of $384 million.
Joule: a privately held startup which closed a $30 million second round of funding and has since been commercializing its production platform based on its patented super micro-organism. The company claims that its unique production ready platform converts sunlight and waste CO2 directly into clean, fungible diesel fuel, bypassing the limitations of biofuel production. This way, they are able to produce up to 15,000 gallons of diesel per acre annually, at costs as low as $20 per barrel equivalent including subsidies.
Mascoma Corporation: the company has raised $100 million from private investors and received $100 million in grants and loans from federal and state government agencies. Mascoma’s goal is to streamline the cellulosic biofuels production process by genetically engineering a microorganism that can metabolize cellulose and produce ethanol in a single step. By combining these enzymatic digestion and fermentation into a single process production costs are significantly reduced by eliminating the need for enzyme produced in a separate refinery. This process, called Consolidated Bioprocessing or “CBP”, will ultimately enable the conversion of cellulosic feedstock to ethanol in just a few days.
As seen with these examples, the R&D of biotechnology companies form a growing market for new solutions and technologies in synthetic biology. Development and competitive advantages in these fields rely on new innovations, lowered costs and accelerated production rates.
Competition
First obstacle in stepping to any scale of industrial or research use is the status quo. Any research group or industry has already some method for production of the product in question. These methods have been carefully tested with processes that generally take years before the technology is widely accepted and transferred into general use. This means that our technology has to be carefully tested, the results must be accurate and repeatable, and there has to be a way to eliminate the possible safety issues of implementing the technology.
Some companies have been successful in applying synthetic biology to address the needs of larger scale bioproduction industries. Many of our potential competitors are also good examples of how to be a successful entrepreneur in synthetic biology:
Synthace is a synthetic biology company from the UK with a platform of technologies for engineering and optimisation of biological production systems. Synthace harnesses the ability of micro-organisms to produce chemical and biological products from sustainable and renewable feedstocks. In addition to equity funding, the company has received a £500,000 Technology Strategy Board award entitled ‘Rapid Engineering of Cellular Factories’. Their approach to bioengineering is broadly applicable across multiple industry sectors, mostly the production of specialty chemicals such as fuels and medicine.
Zymergen builds and optimizes the microbes that serve as cellular factories in the $100B+ industrial biotech sector. Zymergen's products, optimized cellular factories, drop directly into their customers' existing bio-manufacturing workflows for immediate impact on their bottom line without additional investments in infrastructure and capital equipment. Their approach combines biology, robotic automation, and proprietary computational and analytic methods to industrialize what to date has been a slow, risky, essentially artisanal process. A key element in their success is the ability to apply Big Data technology and machine learning techniques. As a result, they generate microbes that produce novel chemicals, advanced materials, and pharmaceuticals faster and at lower costs.
World Biotechnology is a synthetic biology company that claims to lower the cost of production in pharmaceuticals, biofuels, chemicals and agribusiness, and reduce the carbon footprint along the way. WB has developed a technology to enable microorganisms to be significantly more efficient in the production of mentioned products. Their patented Direct Light Technology, DLT, is a synthetic biology platform that, when integrated into micro-organisms such as yeast, mammalian cell lines, algae, and cyanobacteria, used in industrial biotechnology production processes, improves the efficiency of the process. This results in greater yields and shorter production cycles. According to them, DLT converts light directly into chemical energy with several orders of magnitude greater efficiency than photosynthesis and normal metabolism, even in near dark environment.
SynBio Consulting is a company offering consultation and networking with experts and organizations across the private, public and social sectors. They claim to have deep functional and industrial expertise in the field of growing companies’ revenues with the use of synthetic biology. They address the unique needs of each customer and aim to tailor their services according to customers needs.
Our Advantages
In every aspect of our services, we focus on flexibility. As we develop a personal plan with each customer, we will offer solutions that fill the individual needs of these companies. We do not have general guidelines or limited service packages - both the content and pricing of our services are dynamic and adjustable.
By licensing our technologies under Open Source license we will allow the scientific community to access and develop our solutions further. Any improvements and findings will also be at our direct disposal. Our clients will therefore always get the latest version of these technologies available. We commit ourselves in updating our client’s systems on request, so they’ll always have the latest version. Without the need to use extensive resources, we are able to be the first to take advantage of the business opportunities that arise from new research and inventions.
The Open Source license allows us to take advantage of fragmentation of the market. Other smaller companies offering similar services have patented their technologies, resulting in a fragmented field of countless patents and IP incompatibilities. Our technology can be made compatible with other patents and can be used as a part of larger projects.
Our team has a strong interdisciplinary background. We are able to take a broad view on any problem. Our 9 members have expertise in mathematics, theoretical physics, molecular biosciences, genetics and gene technology, information technology, chemistry, bionics, food technology, systems sciences, synthetic biology, product development, computer science, bioprocessing technology, design industrial management, biotechnology and electrical engineering. This gives us an edge on coming up with novel and creative solutions.
Potential Obstacles
Our Gene Switch technology is still in testing phase. We have been getting positive results from various experiments and so far the system works as intended. However, it is possible that the development and testing will take more time and resources than anticipated.
The overall financial market poses a challenge to young synthetic biology entrepreneurs. The business opportunities of this sector aren’t well recognized by the majority of investors, so more work on popularizing the idea and advantages of this discipline is still required.
Although we are certain that in the long run it will be the basis of a better science and business environment, the investors and people who back us up might not be upright interested in non-patentable technology. A paradigm shift is required, but the new approach makes it possible for even garage companies to utilize all available knowledge in synthetic biology and start businesses of their own.
SWOT Analysis
A SWOT analysis is a structured planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a business venture.
Using Strengths to Take Advantage of Opportunities
The interdisciplinarity of our team combined with annual new inventions discovered by researchers and iGEM teams using BioBricks, our range of possible solutions and new technologies is enormous. All future inventions will be available under the Open Source license, so no patent can prevent the spread, improvement and commercialization of Open Source technologies in new ways. The flexibility of our organization allows the development of better business models and new ways to take profit from our Open Source approach in the future.
Using Strengths to Avoid Threats
The team’s interdisciplinarity gives us a vast web of connections to different research institutes. By having strong emphasis on networking and continuously involving ourselves with the public and media, we will have connections and visibility needed to reach our customers. This will also be used to promote Open Source concept to larger audiences.
Overcoming Weaknesses by Taking Advantage of Opportunities
Compatibility with the BioBrick standard together with the distinctivity from patented solutions are the main arguments for long term profitability of Open Source concept. Investors must be made to see the effect of their input on a much wider scale: the widespread usage of Open Source concept in the future will lead to profitable solutions and technologies at faster pace than in present. As long as the realization of Open Source technology is kept within in our company, the issue of education and experience will take care of itself with hard work and enthusiasm.
Minimizing Weaknesses to Avoid Threats
Being undergraduate and inexperienced with business leaves our team in a questionable position to compete against experienced biotech entrepreneurs. The solution is to acquire an experienced mentor, partner or employee to develop and create stronger business strategies with the rest of the team.
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