Bringing Breakthrough Science to Market Is Never Easy, But these 3 Companies Are Making it Happen
Their secret is looking beyond traditional VC’s
PHOTO CREDIT: Getty Images
In 1938, Bill Hewitt and David Packard, two graduates of Stanford University's engineering program, decided to start a company in a rented garage with an initial investment of $538. In the decades that followed, their company, Hewlett Packard, became one of the most prominent technology firms in the world.
They also planted the seed for what is now known as the Silicon Valley garage startup. Today, we don't see anything unusual about ambitious young entrepreneurs with an idea to change the world scraping together a prototype, attracting capital from venture investors and disrupting industry giants.
Yet now we're entering a new era of innovation and things are no longer so simple. For many so-called "hard technologies" - those that do not involve software or consumer gadgets -- a prototype typically costs millions of dollars and requires sophisticated equipment to develop. That's exponentially harder to achieve, but these three companies are working to make it happen.
Atlas Energy - Bringing Nuclear Batteries To Industry
On August 6th, 2012, the Curiosity rover landed on Mars. Its mission was to explore the area around the Gale crater, check for signs of biological life, investigate the chemical composition of soils and assess surface radiation. Today, almost six years later, the rover is still humming along, sending images and data back to earth.
Curiosity is powered by a nuclear battery that can last for as much as 50 years. Clearly, there is a great need for batteries like that here on earth, but its fuel, Plutonium 238, is devilishly hard to make. There is only one reactor, in Oak Ridge Tennessee, that produces it and even that facility only makes enough to power one battery every five to ten years.
Atlas Energy has developed a process that can make similar batteries out of nuclear waste, such as medical isotopes. Currently located at the Chain Reaction incubator at Argonne National Laboratory, it plans to make batteries that can power remote facilities such as offshore oil rigs, research facilities and even a moon base. It has also found that its process can convert waste heat, such as from a campfire, into usable energy to power devices.
"While we are nuclear scientists and that is at the core of everything our company does, we've found that our technology has the potential to convert waste heat that normally goes unused into something useful that can power important applications," Ian Hamilton the company's CEO told me.
Polyspectra - Making 3D Printing Real
Anybody who has ever played around with a 3D printer understands the basic problem. On the one hand, the technology is mind blowing. You can take a design for just about any object and just print it out. Yet when you do, you find that the plastic resins that 3D printers use are brittle and have a tendency to melt, making it hard to actually do anything practical with the machines.
Raymond Weitekamp is working to change that. As a PhD student under Nobel laureate Robert Grubbs, he developed a new type of chemistry called PhotoLithographic Olefin Metathesis, which basically uses light to trigger a chemical reaction that changes the properties of materials. It was a major breakthrough that Weitekamp thought could lead to a successful business.
At first, like most entrepreneurs, he looked for the largest addressable market he could find and immediately hit on semiconductors. Yet he soon found that, because the industry was so large and competitive, there was little interest in a company like his. He needed to find a hair on fire use case -- an industry with a problem that needed solving so badly that it was willing to work with a young startup company. That's what led him to 3D printing.
"We were super excited about the potential for the computer chip market," Weitekamp told me, "but when we started actually talking to customers we found that, because it was such a huge market, there wasn't any excitement about a new supplier. When we began meeting with the 3D printing people though, they were immediately, like 'this could be the holy grail.'"
At this point, the company, Polyspectra, looks to have a bright future. After incubating at Lawrence Berkeley Laboratory's Cyclotron Road, it has developed a 3D printing resin that is both tough and can handle temperatures of up to 150 degrees Celsius. It expects to do another round of venture funding later this year and to be profitable within 24-36 months.
3-Scan - Seeing Biology In 3 Dimensions
When Todd Huffman was working on his PhD, he became intensely interested in understanding how brains were wired, but that interest soon gave way to frustration. Traditional microscopic imaging techniques just didn't work very well. They were slow and cumbersome, taking days to prepare a slide and even then it was often hard to understand what you were looking at.
As a computational biologist, it seemed clear to him that the process could be automated, but to do so the entire field of microscopy would have to reimagined. Given that the field has been around for centuries, that's a very tall order, but Huffman thought he could make it work and applied to Breakout Labs, a non-profit that helps ideas like his off the ground.
With seed capital, as well as advice from Breakout Labs Scientific Director, Hemai Parthasarathy, Huffman and his team slowly began to put things together. They developed a transparent blade that allowed them to combine the cutting and imaging and take thousands of sequential tissue samples. Then, using advanced computational techniques, they were able to weave the images together into a three dimensional image of astounding detail
The results, as you can see in this video, speak for themselves:
Today the company, 3Scan, is well on its way to becoming profitable. It made its first million dollar sale last year and is working on a dozen more in the pipeline. Huffman told me he expects to be profitable in a year or two and has even bigger plans. "We believe that our technology can create a new language to describe disease, much like the graphical user interface created a new language for computers," he says.
Building An Ecosystem For A New Era Of Innovation
Atlas Energy, Polyspectra and 3Scan are all very different companies, competing in very different industries and are in very different stages of development. They also employ very different skills and areas of expertise, spanning nuclear engineering, chemistry and computational biology.
So you can see how the typical Silicon Valley investor would have trouble making sense of opportunities like these. Unlike Bill Hewitt and David Packard, they can't just whip up a prototype in a garage. Even if they could, how do you evaluate something like a nuclear battery, a new field of chemistry or the impact of 3D microscopy, without deep expertise in each specific field?
That's why each company got its start from nontraditional investors. Cyclotron Road and Chain Reaction are incubators located at national laboratories. Breakout Labs is a nonprofit that Peter Theil set up specifically for science-based startups. Venture capital is also beginning to adapt, combining deep domain expertise in a particular field with capital and industry expertise.
"We are seeing a new breed of investors emerge that specialize in managing a very specific type risk and invest both in the form of seed money as well as in-kind contributions such as facilities, tools and subject matter expertise." Todd Huffman of 3Scan told me and points to Bolt Labs, Indiebio and DCVC as investors who are leading the charge.
What's most important is that we begin to understand that this new era of innovation will not be like the last one, much like the digital revolution was unlike anything that preceded it, but it will unlock value that has remained dormant for far too long.