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What is the winning business model when it comes to the the Biospace co-working industry?
Hello! Thanks for your question about the winning business model for the Biospace co-working industry. The short version is that the most promising business model appears to be a paid membership model that often includes lease of space with additional features. Below you will find a deep dive of my findings.
METHODOLOGY
The most promising business model within the Biospace co-working industry appears to be a paid membership model that often includes the lease of space and some value added features based upon examples from five of the most successful biotech lab sharing spaces in the United States. To answer your question of what the customer wants, we will try to provide the revenues of the companies used as examples in order to prove that this model is the most attractive to customers as the companies have proved successful in terms of revenue. However, due to the private nature of the companies covered in these examples, we will provide funding details as an alternative for those with revenue information unavailable.
BACKGROUND
As space can vary from $50 per square foot to $185 per square foot, companies need to search carefully to find spaces appropriate to their revenue streams A report from the Oregon-based Portland Development Commission estimated the cost of constructing a new lab to be $250 to $1000 per square foot depending on what type of lab, while Class A office buildings in Portland are $120 to $150 per square foot. The ability to rent facilities in large labs that have closed and re-opened for rent allows small- to mid-sized companies to rent first class lab space at a savings with the possibility of including offices, small production plants, and lab space.
In the biotech bellwether of Cambridge, Massachusetts, the average vacancy rate of lab spaces is 7.3% as of the end of the second quarter of 2015, which is half of that of 2014's according to brokerage Cushman Wakefield. The average rental rate is $64.47 per square foot with a year-over-year increase of 25.7%. CEO Rich Robbins of San Rafael, a California based Wareham Development, downplays the link between NIH funding and occupancy. Biotech companies have access to several sources of capital and naturally move towards research institutes. There is, however, a pressing need for space in the San Francisco Bay Area life-science sub-markets, many of which had average vacancy rates of 5% or less in the second quarter according to brokerage Kidder Mathews. Robbins acknowledges the need to build 250,000 to 300,000 square feet of new lab space roughly every 24 months just to keep pace with the demand.
EXAMPLES OF SUCCESSFUL BIOSPACE LAB SHARING SPACES
BIOCURIOUS
Members of the San Francisco Bay Area hackerspace Biocurious founded a company to demonstrate consumer’s fascination with bioluminescent plants via a Kickstarter campaign asking for a mere $62,000 and ended up with half a million. Membership benefits of Biocurious include access to lab and co-working space during open hours, class and event discounts, free supplies, personal storage space in the lab fridge, chemical cabinet, and freezer, free safety training and orientation, and free office space with appointment. Biocurious has been working on searching for industrial space to serve more members and needs pledges to Kickstart their community lab in order to pay for the basic starter synthetic biology lab, provide a security deposit on a warehouse, and cover liability insurance for all lab users.
Biocurious is a non-profit effort that receives revenue from monthly membership fees that are not to exceed $200 per month and classes with all revenue going towards building their lab. None of their members or founders is paid for their work and funds from the Kickstarter will not be used to pay salaries. Within the past five years or so, grassroots, non-profit organizations have been working to increase the amount of research done on genetics engineering with the advent of community biology labs run by these organizations. Biocurious is located in San Francisco and charges a $100 per month membership fee that includes lab space, class discounts, supplies and equipment, office and storage space, and training. Many of the items on the equipment list costs from $1,000 to $4,000 per piece.
GENSPACE
Genspace is New York’s first and only DIY biological lab with a motto/bill of services that says “Hacking is not a crime” in reference to “bio-hacking”. Anybody can access their biotechnology equipment and classes on genetic engineering and lab techniques for a monthly fee of $100. Genspace is a place where scientists can run proof-of-concept experiments without spending large amounts of time and money to get to the stage where they can move into an incubator or co-working space that charges $1,000 or more per month for a lab bench. Genspace community members offer other members business and legal advice as needed out of camaraderie. They have successfully pre-incubated several biotech startups including Opentrons, which currently has 16 employees and has risen over $2 million in funding. Their community is strong enough that startups that have moved on are still members or have pledges future profits to the organization. Genspace’s revenue is $4.4 million per year.
LABCENTRAL
LabCentral is a shared lab space designed to work as a launch pad for premier high-impact life-sciences and biotech startups. Amgen, one of LabCentral’s platinum sponsors, can nominate at least two early-stage companies per year to take up residence in LabCentral’s Kendall Square facilities in Cambridge, Massachusetts. Amgen helps defray the cost of membership at LabCentral without any conditions for winners of the Golden Ticket program. LabCentral has a monthly fee of $400 per person. Their fully equipped co-working lab and office area featuring 30 individual bench spots and 14 lab desks go for $4,000 and $450 to $550 per month respectively. There are 8 private lab suites that can accommodate up to 8 employees available for $16,500 to $18,000 per month. There is a monthly fee of $1,500 to $4,000 for the 18 private offices. Programs, such as group purchasing and other programs with pooled access, reduce costs. Facility LabCentral is currently estimated to have annual revenue of $4,449,420 and employs roughly 6 staff members.
COUNTER CULTURE LABS
Counter Culture Labs is based in Oakland, California. They have launched a $30,000 crowd funding campaign to promote their mission to democratize science via a full-fledged community lab space in the city’s Temescal District in the two years since its founding. Counter Culture Labs’ basic membership is $80 per month and includes access to lab space and equipment after safety training as well as full voting rights at their regular members meetings. Their Biosafety Level Zero membership is $20 per month and works for people that do not need access to lab areas, equipment, or hazardous materials but want to participate in the Fermentation Station, the Bay Area Applied Mycologists, work on electronics, or hang out. Counter Culture Labs has a more environmentally conscious focus and does more bio art as compared to other community labs in the country. Counter Culture Labs is based in Oakland, California. They have launched a $30,000 crowd funding campaign to promote their mission to democratize science via a full-fledged community lab space in the city’s Temescal District in the two years since its founding.
CIC MIAMI
CIC Miami has labs starting at $1,250 per month. They have Miami’s only non-academic shared wet lab facilities. They have 23 state-of-the-art flexible, modular labs and prep rooms, once-through air flow throughout and dedicated fume hoods in the larger labs, access to shared equipment including an autoclave, sterilizer, Milli-q water purification system, and an industrial ice machine, and a modular mechanical system for easy lab expansion. Their available tenant power capacity is 15 watts per square foot. Shared office workspace, conference rooms, event spaces and kitchens are available as well. They also have programming for startup founders as well as management and key staff charged with commercialization and growth strategies. CIC Miami’s currently estimated to have annual revenue of $205,157 and employs roughly 3 staff members.
CONCLUSION
To wrap it up, the paid membership model appears to be the most successful in the Biospace co-working industry. Thanks for using Wonder! Please let us know if we can help with anything else!