Team:Arizona State E/Problem

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<h2>Problem</h2>
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In 2006, the University of Edinburgh iGEM team developed an arsenic biosensor that could effectively detect trace arsenic in water. Inspired by the enormous social implications such a device would have upon developing nations, Lumen Biosensors was born. Led by Dr. Gautam Mukunda of Harvard University, the socially-focused Lumen Biosensors was a pioneer venture developed from iGEM. Unfortunately, the project failed due to an array of reasons. In a general address to the National Academy of Sciences, Dr. Mukunda noted that two critical elements that they could not adequately account for at the early stages were funding and effective team composition.
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This startup soon became a case study that posed interesting questions for the field of synthetic biology:
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<b>Was there room for synthetic biology products that were less profitable but held solutions to social ailments?</b>
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<b>Why is this field predominantly surrounded by forprofit companies?</b>
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<b>Could a nonprofit synthetic biology company exist despite high research and legal studies costs? And would there be adequate donations for it to work?</b>
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While successful synthetic biology companies such as Amyris and Gingko are cardinal examples of a thriving young industry, it seems as though socially driven organizations are doomed to fail. This was due to the nature of the biotechnology industry itself.
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<img src="https://static.igem.org/mediawiki/2012e/4/40/ASUiGEME12_MarketEntry.png">
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<i>Figure 1: Generalized process of Biotech Product Entry to Market</i>
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The above figure is a visual representation of the three key milestones and obstacles a product must overcome before it can distributed. Research and development is fundamental to making a product, clinical trials and legal regulations must be overcome for the product to be used at all, and lastly, the product must enter the market through standard business procedures. While this process seems fairly straightforward, we must also consider how money plays into this scheme.
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<img src="https://static.igem.org/mediawiki/2012e/f/fc/CashFlow.png">
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<i>Figure 2: Cash Flow in SynBio Product Development</i>
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First note the pyramid structure—this is a visual representative of the amount of money attaining each milestone in biotech entrepreneurship. Biotech companies require tremendous capital to successfully accomplish market entry and profit generation. This is an important concept to understand because the nature of these companies skew investor favoritism. In a simplified sense, financial success is driven by cash flow. If a business is able to receive a consistent sum of money, it will pay a return to potential investors. Other investors see that there is money to be made and thus, the business continues to grow and expand.
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In biotechnology, it is not quite as simple. There is a tight bottleneck between each step and companies will often fail in the transition towards each step due to a variety of reasons, including legal rejection. Therefore, more than just the biotech industry, synthetic biology has become incredibly risky. While the payout is enormous, the likelihood of a project to reach market status is very unlikely.
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</p>
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And note: this is for companies that are intuitively profitable, such as healthcare applications and biofuel development. This bottleneck has prevented expansive diversity in the business of synthetic biology. Here’s why:
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<img src="https://static.igem.org/mediawiki/2012e/4/4a/CashFlow2.png">
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<i>Figure 3: The Social Focus Cash Flow</i>
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<p>
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Simply put, little to no money is made from a nonprofit product. Nonprofits are not like conventional businesses—they do not have investments—they have donations. These donations go towards accomplishing each milestone. However, biotech research requires huge funds. Conventional donations are not applicable. Given the nature of biotech startup success rates as well, investors are interested in high risk high reward situations. The nature of a nonprofit biotech company means that there is only a high risk that money is lost towards a social cause. That money is also never regained even if the product works. It is simply recycled into the system.
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</p>
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<p>
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Furthermore, these socially focused organizations have no means of self-sustenance. They are entirely dependent on donations from others. Thus, at any given time there may be a shortage of funds that prevent them from accomplishing the next step. This bottleneck accounts for the predominantly forprofit SynBio companies that exist today. Companies like Lumen Biosensors may be noble, but they can’t make money. This limits out business-driven development of a whole slew of synthetic biology applications. It is our personal belief that SynBio has the unique ability of solving several problems in an innovative way, and we would like to see a proliferation of projects that may all impact society for the better.
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</p>
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<p>
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Thus, ASSET wants to bring social drivers to the forefront of not just synthetic biology, but also business as a whole. Through the use of the innovative Community-Focused Corporation model, ASSET believes that a business structure centered around strong social focus in conjunction to unique financial mechanisms and legal partnerships can create a sustainable company that expands not only a new market of synthetic biology, but also improve it.
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</p>
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Latest revision as of 10:46, 26 October 2012

Problem

In 2006, the University of Edinburgh iGEM team developed an arsenic biosensor that could effectively detect trace arsenic in water. Inspired by the enormous social implications such a device would have upon developing nations, Lumen Biosensors was born. Led by Dr. Gautam Mukunda of Harvard University, the socially-focused Lumen Biosensors was a pioneer venture developed from iGEM. Unfortunately, the project failed due to an array of reasons. In a general address to the National Academy of Sciences, Dr. Mukunda noted that two critical elements that they could not adequately account for at the early stages were funding and effective team composition.

This startup soon became a case study that posed interesting questions for the field of synthetic biology:

Was there room for synthetic biology products that were less profitable but held solutions to social ailments?

Why is this field predominantly surrounded by forprofit companies?

Could a nonprofit synthetic biology company exist despite high research and legal studies costs? And would there be adequate donations for it to work?

While successful synthetic biology companies such as Amyris and Gingko are cardinal examples of a thriving young industry, it seems as though socially driven organizations are doomed to fail. This was due to the nature of the biotechnology industry itself.

Figure 1: Generalized process of Biotech Product Entry to Market

The above figure is a visual representation of the three key milestones and obstacles a product must overcome before it can distributed. Research and development is fundamental to making a product, clinical trials and legal regulations must be overcome for the product to be used at all, and lastly, the product must enter the market through standard business procedures. While this process seems fairly straightforward, we must also consider how money plays into this scheme.

Figure 2: Cash Flow in SynBio Product Development

First note the pyramid structure—this is a visual representative of the amount of money attaining each milestone in biotech entrepreneurship. Biotech companies require tremendous capital to successfully accomplish market entry and profit generation. This is an important concept to understand because the nature of these companies skew investor favoritism. In a simplified sense, financial success is driven by cash flow. If a business is able to receive a consistent sum of money, it will pay a return to potential investors. Other investors see that there is money to be made and thus, the business continues to grow and expand.

In biotechnology, it is not quite as simple. There is a tight bottleneck between each step and companies will often fail in the transition towards each step due to a variety of reasons, including legal rejection. Therefore, more than just the biotech industry, synthetic biology has become incredibly risky. While the payout is enormous, the likelihood of a project to reach market status is very unlikely.

And note: this is for companies that are intuitively profitable, such as healthcare applications and biofuel development. This bottleneck has prevented expansive diversity in the business of synthetic biology. Here’s why:

Figure 3: The Social Focus Cash Flow

Simply put, little to no money is made from a nonprofit product. Nonprofits are not like conventional businesses—they do not have investments—they have donations. These donations go towards accomplishing each milestone. However, biotech research requires huge funds. Conventional donations are not applicable. Given the nature of biotech startup success rates as well, investors are interested in high risk high reward situations. The nature of a nonprofit biotech company means that there is only a high risk that money is lost towards a social cause. That money is also never regained even if the product works. It is simply recycled into the system.

Furthermore, these socially focused organizations have no means of self-sustenance. They are entirely dependent on donations from others. Thus, at any given time there may be a shortage of funds that prevent them from accomplishing the next step. This bottleneck accounts for the predominantly forprofit SynBio companies that exist today. Companies like Lumen Biosensors may be noble, but they can’t make money. This limits out business-driven development of a whole slew of synthetic biology applications. It is our personal belief that SynBio has the unique ability of solving several problems in an innovative way, and we would like to see a proliferation of projects that may all impact society for the better.

Thus, ASSET wants to bring social drivers to the forefront of not just synthetic biology, but also business as a whole. Through the use of the innovative Community-Focused Corporation model, ASSET believes that a business structure centered around strong social focus in conjunction to unique financial mechanisms and legal partnerships can create a sustainable company that expands not only a new market of synthetic biology, but also improve it.

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