Strategic Due Diligence of Emerging Technologies for the Advanced Bioeconomy

December 06, 2018

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By Bob Kodrzycki (Encompass Biotech LLC) and Doug Rivers (Lee Enterprises Consulting Inc./Biofuels Digest) ... It’s the use of the most recent improvements that put the “advanced” in the advanced bioeconomy. So, by definition, the advanced bioeconomy relies on emerging technology. While some may see the wealth and excitement of opportunity in emerging technology, others may be put off by the unproven nature and the high risk.

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In part, the following can be concerns for establishing a successful commercial venture in the advanced bioeconomy:

All or part of the process may be novel and thus there may be little basis for comparison to proven technology to establish likelihood of success.
The product may be novel and not have an established market presence.
The founders are often the inventors of the technology. Engineers or scientists who may have had little practical experience in business development and/or commercialization.

Many investors use checklists to evaluate the “readiness level” of a technology or investment opportunity. See Dave Humbird’s article earlier in this series: Expanded Technology Readiness Level (TRL) Definitions for the Bioeconomy for an overview of TRLs. These Technology Readiness Levels (TRLs) or Investment Readiness Levels (IRLs) are specific to each opportunity but can be summarized, in part, by answering the following questions.

Is the product idea appropriate for the current market?
What is the competitive landscape for the product?
Is the scientific basis understood for the product?
Is the product effective under commercial conditions?
Can the product be produced at scale?
Can the team can pull it off?

Often the modern bioeconomy involves processes that are more science than engineering based, and it is the reliance on production using a biological organism that increases the risk factors. Biology usually means high variability whereas engineering implies high reliability and tight tolerances. The emerging discipline of synthetic biology is, in part, an attempt to make the use of biological organisms more reliable and predictable in ever more complex processes by creating organisms with high reliability and tight tolerances.

So, our task is to make biology more like engineering…or at least to gain an understanding of what is needed to overcome the inherent variability in biological systems, so they can be treated like engineering projects.

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Market pull, not technology push.

A clear benefit to the market that fills an established demand is a much easier path forward than convincing customers that they have a problem…and that only your product can solve it. Also consider that adoption of the new technology should solve problems, not create new ones.

Product fills a demonstrated need in the market and adds value.
Implementation is compatible with current standards and practices.
Market sector is quantified, and the addressable market is reasonable

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Winning requires a great team.

Science-based product development is fraught with risk and uncertainty for both investors and the technologists. Science is about discovery and invention, which in the business world requires bravery and ingenuity. Variation is high at times and requires that test procedures be designed with variability in mind.

Given these realities, great leadership is a critical factor. It takes a team that understands the details of both the science the business of the product/process under development.

Are the critical C-suite Directors and Managers on board?
Does the existing management team work and communicate well together?
Does the team have the proper background and experience to be successful?
What are the gaps and how will they be filled?

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In addition to first adopters, there must be an effective distribution and marketing plan to compete in the marketplace.

Are first adopters, farmers in this case, part of the team?
Are these first adopters influential among their peers and have a history of successfully evaluating new technologies?
Is the distribution and marketing path clear with critical relationships in place or identified?

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The Path Forward

Development and commercialization of emerging technologies will always be a challenge. To improve the chance for success, it is important that technology developers not only understand their own technical areas of expertise, but also understand what investors need to know about the science and engineering of the technology and how they work together to achieve success. Developers also need to be aware of how investors evaluate technologies as new commercial opportunities. Good science and engineering alone are rarely good enough to meet the demands of the commercial marketplace. A deep understanding of the specific target market and distribution channels are critical to success.

Commercializing emerging technology, by its very nature, is risky business. De-risking the technology development and the investment should be approached by adopting a policy of working from a position of knowledge. Third party experts can go a long way in bridging knowledge gaps at all stages of your emerging technology projects. READ MORE