Nov 27, 2014


By Stephanie M. Lee

San Francisco Chronicle

Thursday, November 27, 2014

The freezer appeared perfect for Nirmidas Biotech. It could chill samples at a numbing minus-80 degrees Celsius. Used and marked down to $130 in the online auction, it was vastly more affordable for the startup than a brand-new, $20,000 fridge.

Only when two employees went to claim the appliance did they see it for what it was: a 1,000-pound, 80-inch-tall monstrosity that took an hour just to wiggle out the door. It took a few more minutes to realize it wasn’t going to fit in the 79-inch-tall U-Haul.

The workers returned the next day, chagrined yet prepared with an 18-foot-tall truck with an attached rail liftgate.

“It was my first time driving anything that big, and luckily I didn’t destroy any sidewalks or hit any people,” said Josh Robinson, research and development director of Nirmidas. “I got it to where it needed to go and there’s a happy ending, thankfully. There’s not an abandoned laboratory freezer sitting on the side of a sidewalk somewhere.”

Highly precise, specialized lab equipment is crucial for sequencing DNA or sorting cells. But when the tools are pricey and the budget is thin, entrepreneurs have creative ways of finding what they need, from scouring eBay and Craigslist to swooping up the possessions of failed startups.

For dozens of seed- and early-stage companies in the Bay Area, one solution is to share space and equipment at the California Institute for Quantitative Biosciences, or QB3, a network of life-science incubators in San Francisco, Berkeley and Palo Alto, the latest addition.

As of this month, those companies, including Nirmidas, have access to an even bigger toolbox. Under an agreement with American Laboratory Trading, which buys and sells used scientific instruments, QB3 will receive more than two dozen pieces of equipment for free. That’s on top of the nearly $1 million worth of equipment that QB3 tenants already have access to.

The arrangement may help the network’s 62 startups make the most of their lean budgets, which range from $100,000 to $1 million, said spokesman Kaspar Mossman. Venture capital was scarce for such companies following the recession, a trend now showing signs of turning around.

In the second quarter of the year, investors funneled $1.1 billion into 100 deals with early stage life-science companies, a 22 percent growth from the same quarter the previous year, according to PricewaterhouseCoopers. Still, funding in this sector has dwindled compared to others, suggesting that venture capitalists are more attracted to industries with shorter periods of investment and cheaper capital costs.

“The startup mentality is one of looking for cost savings wherever you can,” said Robinson, whose company is developing fluorescence-based diagnostics for early disease detection with $2 million in seed funding. “You don’t have the resources of a billion-dollar Google or anything like that. You just want to stretch your dollars as far as you can.”

As scientific director and operations manager of QB3’s incubator at 953 Indiana St., Rich Yu will train researchers to use the newly donated instruments. Yu knows first-hand the importance of used equipment. He bought a lot of it for his algae biofuel startup, Green Pacific Biologicals — and recently sold it to friends in the industry when the company went belly-up.

EBay and other bidding sites tailored to science gear can be fruitful, especially when local companies shut down and put up goods for sale. But auctioned-off products are not guaranteed to work, so employees can spend hours troubleshooting instead of researching, Yu said.

American Laboratory Trading sells equipment for 50 to 80 percent off the retail price and offers a one-year warranty, “so you can save a little bit while getting something that’s not going to be broken when it ends up on your porch,” Yu said.

American Laboratory Trading of Connecticut is giving QB3 a high-powered microscope, centrifuges that spin and separate liquid samples, polymerase chain reaction machines that make copies of bits of DNA, and other basic molecular biology equipment, with a total retail worth of about $150,000. The company has also teamed up with incubators in Connecticut and Massachusetts in an effort to form relationships with scientists who are just starting out.

Over five years, demand has shifted from mostly academic labs to mostly companies, perhaps in part because it’s now acceptable in the industry to buy used equipment, said Jayson Bernstein, American Laboratory Trading’s chief operating officer. Right now he’s seeing an unprecedented amount of equipment being sold off, which could be an anomaly or a sign of “a tremendous growth of the industry.”

Even growing businesses may prefer to maintain the startup approach to finances out of principle. In four years of operating, Lygos, an Emeryville startup backed by $5 million, estimates that it has spent less than $150,000 on tools ordinarily worth $1 million. “Even if money weren’t an issue, if we had an infinite amount of money, we don’t need the super high-end, brand-new, flashy equipment,” said co-founder Eric Steen.

Lygos’ dozen employees, who are using synthetic-biology techniques to create renewable chemicals without petroleum, have been resourceful in other ways too. After it left QB3 in 2011 but before it moved into its 2,200-square-foot lab in Emeryville last year, Lygos rented space in an Albany warehouse that it shared with its landlord, a DNA-sequencing company. That company let Lygos use some of its equipment when its employees weren’t around — and Lygos now returns the favor to other startups.

“The Bay Area biotech community feels big, but the reality is everyone kind of knows each other,” Steen said. “When you’re in a position to help out other startup companies and give back in that way, it makes a lot of sense.”

Stephanie M. Lee is a San Francisco Chronicle staff writer. E-mail: Twitter: @stephaniemlee