Executive Summary: BV Investment Partners Strategic
Investment in Synthetic Biology
Overview
Project Background
BV Investment Partners is a leading middle-market private equity firm investing business service, IT services and software across a variety of end markets, including a dedicated focus on healthcare services and software.
Synthetic biology (synbio) is a growing market across multiple industry verticals, and one which is of potential interest for investment for BV given underlying market trends.
Project
Objective
As part of the Healthcare Management, Design, and Strategy course at Columbia Business School (CBS), our interdisciplinary team of students from CBS and the Columbia University Irving Medical Center collaborated with a successful private equity firm to assess the synbio ecosystem and potential investment areas.
Synthetic biology is an emerging field, and is applicable across a variety of sectors, the health care sector shows the most growth and profitability potential, thus drug development and the health care space in particular, were key targets for our client. We sought to identify the sub sectors with the most potential within healthcare which falls within our client's investment criteria
Project
Approach
In order to assess probable investment areas, we first sought to gain a thorough understanding of the synbio ecosystem. An iterative process, and via strategic interviews with key industry participants, leaders from synbio companies and consultancy firms, we worked through five hypotheses. This approach helped us to gain clarity, while honing our list of target investment areas for our client, using learnings from all previous meetings to refine questions and talking points. Hypotheses include:
● Hypothesis #1: Synthetic biology spans multiple industries, but healthcare is the dominant sector which warrants a deeper dive for investment.
● Hypothesis #2: In healthcare, massive investments in synthetic biology startups are focused on 2 major segments: transformative technology or multifunctional end-products. We hypothesize that investments in technology will be more profitable than investments in end-products.
● Hypothesis #3: Technology is utilized in each phase of the synthetic biology life cycle. We hypothesize that an investment in early phases (i.e. design) would be the most profitable for BVIP.
● Hypothesis #4: Synthetic biology demands a different ecosystem than traditional pharma and biotech development.
● Hypothesis #5: There are identifiable pain points within the services ecosystem of synthetic biology that provide opportunities for investment.
Key
Goals and Strategic Choices
Based on our discussions with our client, as well as findings from industry interviews, we defined several pain points unique to synbio, with the potential for future investment. We then assessed the current space, existing players in the field, ability to target specific opportunities, and switching costs associated with or within each.
Recommendation
After evaluating multiple subsectors, our recommendation was to invest in DNA data storage because there is an increasing demand for storage capacity as innovation explodes in synthetic biology. Data storage was a major pain point for many synthetic biology companies. We discovered that traditional media storage relies on coding and decoding algorithms and the storage capacity is limited. Data centers can spend as much as $1 billion and 100 million kilowatts of electricity to maintain storage for 10 years, but DNA storage reduces these expenses by 3 orders of magnitude.[1][2] DNA storage is less expensive and is far more energy efficient compared to traditional media storage.
DNA storage uses the basic elements of DNA
molecules (adenine (A),
thymine (T), guanine (G) and cytosine (C)) to code information into a
DNA molecule. Scientists believe that they can
store 215 petabytes
(or 215 million gigabytes) of data in a single gram of DNA.[3] DNA
storage increases data robustness, scalability and stability. Within DNA data
storage, there are two types of data: in-vitro
and in-vivo DNA storage.
● in-vitro DNA storage, data is stored in oligo pools of DNA; whereas,
● in-vivo DNA storage allows a plasmid of DNA to be inserted into a living cell for storage.
There are several key players in the DNA storage space and many of the companies identified primarily focus on in-vivo DNA storage with the use of various platforms (i.e. chip technology, microcontainers, etc.). We identified 5 companies in North America and the UK that focus on storing, accessing and computing DNA for storage. These companies are private and range in size from 8 to 98 employees. These companies are all potential targets for BVIP. In-vitro DNA storage is less developed, but as the sub-sector continues to expand, there will be additional opportunities for BVIP to invest in this space.
Final
Thoughts
The synthetic biology space is complex and continues to rapidly evolve. It is permeating everything from what we eat to the medicine we use daily. BVIP is uniquely positioned to invest in emerging services, like DNA data storage, which addresses some of the pain points in synthetic biology. What makes DNA data storage attractive is that it will provide much needed support to synthetic biology companies driving significant innovation.
Contributors: Laura Emery, Alexandra Lewis, Vivian Li, Kathleen Perry, Pranav Radhakrishnan
[1] Extance A. How DNA could store all
the world's data. Nature 2016; 537: 22–4.
[2] Yiming Dong, Fajia Sun, Zhi
Ping, Qi Ouyang, Long Qian, DNA storage: research landscape and future
prospects, National Science Review,
Volume 7, Issue 6, June 2020, Pages 1092–1107
[3] Service R. “ DNA could store all of the
world’s data in one room: New algorithm delivers the highest-ever density for
large-scale data storage. Science 2 Mar 2017