Shared Services in the St. Louis AgTech and BioTech Innovation Districts
11Min Read
EQ's resident expert in economic complexity theory, Mike Fabrizi, explains the different shared services offered by St. Louis' innovation districts. From lab equipment to utilities management, shared services cuts down on outsourcing costs and increases the chance of your AgTech or BioTech startup succeeding in these resource intensive sectors.
This article addresses shared services as practiced in the St. Louis innovation districts. After defining the shared services concept, we will provide a nutshell discussion of traditional outsourcing. This is necessary to grasp the differences between these two business practices and to note their strategic similarity.
We will then examine two St. Louis-area shared service examples, the Phenotyping Core Facility at the Donald Danforth Plant Science Center and the wet and dry lab arrangements and associated infrastructure, shared workspace, and amenities at BioSTL and BioGenerator. As this article will make clear, these are incredibly sophisticated facilities, offering startups a wealth of technical capabilities.
We conclude the article by noting some distinguishing characteristics of the St. Louis innovation districts’ use of shared services. Importantly, we stress that competition occurs between ecosystems, including both the tenant startups and the shared services available to them.
What is an Innovation District?
An innovation district is a place-specific concentration of intellectual and social capital, facilities and infrastructure, and people with great ideas. Its objectives include accreting and increasing information and knowhow, productizing the same, and birthing new companies. Check out this explainer from The Brookings Institution.
Shared services are a business practice in which functionality (which may range from scientific and technical testing to accounting and payroll processing to general IT) is provided by one part of an organization, or member of a group, to other parts of the organization or group members.
Combining Strengths
For example, neighboring municipal police departments might decide to combine their HR functions, with a large police department providing this function for all other participating departments. The provider is usually reimbursed via a chargeback, or fee-for-service arrangement.
The arguments favoring this arrangement focus on efficiency and specialization. By combining their HR functions, the police departments in the above example might require fewer computer resources, managers and other employees, etc. than if each performed this function separately.
Standardization
In addition, there may be further benefits gained by standardizing the function, and providing a similar “cookie cutter” solution for everyone. Standardization will enable specialization of talent and training, resulting in both greater efficiency and proficiency.
However, there is an additional benefit in the context of innovation district shared services, which is a focus of this article: shared services lower the cost of doing resource intensive innovation.
Cost Effective
Shared Services enable young companies cost effective access to sophisticated technology to lessen the impact on their internal cash flows and startup capital. This benefit is magnified in that the services are sometimes provided to the startups at below-market rates.
Thus, the companies are able to focus on gaining a competitive advantage by focusing resources. They can more quickly build out core competencies (explained below), scale, and better compete against established players with deeper investment pockets.
Outsourcing
Outsourcing is, in many respects, a similar arrangement. However, the outsourcing service provider (termed the “outsourcer”) is traditionally an independent third party. It is not and never was part of the organization or group for which the services are being provided. The work undertaken by the outsourcer is deemed to be critical but noncore.
In this context, a core competency is a collection of expertise, people, and processes by which an organization distinguishes itself from its competition. It is an answer to the question, “Why would anyone buy from us, rather than someone else?”
By contrast, a critical but non-core competency is a collection of expertise, people, and processes that is vital to sustaining the organization, but which does not distinguish it in the global marketplace. This core-versus-noncore criterion undergirding a “make or buy” decision we see as common to both outsourcing and shared services. (N.B. However, what is core versus noncore is often not straightforward, as will be seen in the below paragraphs.)
Outsourcing Further Compared with Shared Services
In addition to outsourcing’s use of independent, third-party service providers, other differences are in evidence between these related business practices.
Outsourcing Vs Shared Services
Much of modern corporate outsourcing stems from practices developed and refined since the late 1980’s, when Eastman Kodak outsourced much of its IT to IBM. Outsourcing has often focused on contractual arrangements between large, mature organizations.
By contrast, the shared services common to business incubators and innovation districts —our focus here— tend to be more transactional and relational. They are often provided on an “as needed” basis among people who work in close proximity to each other and who have become colleagues or friends.
Nonetheless, shared services, like traditional outsourcing, is a breed of business networking in which competition occurs between competing ecosystems. This is an important point that bears reflection. The strength of the services provided, as well as the activities of the startups using these services, will often determine success or failure in the marketplace.
Shared Services are a source of Competitive Strength
Moreover, competitive strength, in this larger sense, consists of the all the strengths brought to bear by the ecosystem in which the startup is embedded. This is why innovation districts need to have very deep and wide talent and infrastructure pools.
In addition, alignment between the shared services and the startups’ business and technical needs is critical. As will be evident below, simple commoditized offerings – such as food services and meeting spaces – are not sufficient, with the services shared being near to the core competencies of the startups.
Phenotyping at The Donald Danforth Plant Science Center
Figure 1. Bellwether Foundation Phenotyping Facility (image source)
One example of innovation district shared services is Danforth Center’s Phenotyping Core Facility, a collection of tools and capabilities that includes the Bellwether Foundation Phenotyping Facility, built in 2013.
While the Phenotyping Facility’s main mission is to support internal Danforth Center researcher labs, phenotyping services are available to portfolio company and external users, as well. Users include entrepreneurs and university people from across the country, and span both large and small companies.
Discounted Usage & Chargebacks
To support the St. Louis Metro economy, startups from our region receive discounted usage and chargeback rates. Researchers who may not be qualified to operate the specialized equipment or who are not located in the metro area can access the facility “as-a-Service” via chargeback.
Providing high-capacity, high-throughput phenotyping in a controlled environment, the Bellwether Facility enables AgTech researchers to precisely measure plants, and enables experiments that would otherwise be infeasible. The Facility includes a custom conveyor belt system and equipment that weighs, waters, and images up to 1,140 plants.
Such research is essential to assess plant responses to different environments, genetics, and interventions. Thus, researchers can identify plant species, hybrids, soil bacteria, and other interventions most useful for increasing food security and agricultural productivity and resilience.
What is Phenotyping?
Phenotyping is the study of the traits of an organism. For plants, this means measurements of traits such as plant height, color, root depth, and so much more. These measurements allow researchers to evaluate plants for crop improvement, agricultural products, and answer fundamental questions in how plants grow and respond to the environment.
Additional Phenotyping Capabilities
Some additional capabilities present in the Phenotyping Core include:
Daily Imaging
Red-Green-Blue (RGB) imaging allows visualization and quantification of plant morphology, color, and development over time.
Near-infrared (NIR) imaging enables visualization and quantification of plant water use efficiency (growth in biomass per unit of water consumed). Plants are imaged from the side and top, and they can be rotated between images to allow all sides of the plant to be imaged.
Plant Ditech Array
The Ditech PlantArray is another means by which to characterize plant-water relationships.
Automated data collection of plant weight occurs every three minutes. Pertinent data collected includes transpiration rates, plant biomass and vigor, plant growth rates, water use efficiency, and more.
This data is useful for addressing research questions such as identifying the soil microbial amendments most conducive to increasing plant water uptake, important for increasing farming’s resilience to droughts.
PhenoVation CropReporter
The CropReporter is a specialized camera, which enables researchers to address questions related to plant photosynthetic efficiency, the process by which plants use sunlight to manufacture biomass.
These questions often provide important insights into plant robustness. For example, which plants are most tolerant of environmental stressors, and which soil amendments provide the best defense against pathogens?
This is a stand-alone, multi-spectral imaging unit; hence, plants can be brought to the camera and imaged as needed rather than in the plant growth location, enabling better control of the imaging environment.
PlantCV
Danforth scientists developed PlantCV, a Free-and-Open-Source Software (FOSS) for image processing used to analyze the massive data sets generated in typical plant science experiments.
It enables researchers to measure phenotypes from various images, such as those taken in the Bellwether Facility or even by a smartphone or a drone-hosted camera. The Data Science Core Facility (another facility within the Danforth Center) supports this software’s development and maintenance, and trains the plant science community in its usage.
Since its inception ten years ago, PlantCV has been downloaded over 20,000 times, and been used in over 80 publications by academic and industry researchers alike. Full-service image and data analysis can be provided to entrepreneurs on a fee-for-service, chargeback arrangement; alternatively, entrepreneurs comfortable with using PlantCV can use it themselves.
Other Services
In addition to all the above, services available to the community (subject to time and skilled technician availability) for an additional cost include:
Planting, sampling, harvesting, and thinning
Image processing support
Ground-truthing(Ground-truthing is often used to verify data collected via remote sensing. The data collected manually, in this case at the Phenotyping Facility, is assumed to be a true measurement of the plant’s phenotype. The data collected by remote sensors, perhaps on a drone or satellite, can then be compared with the ground-truth data, helping to establish whether or not the remote sensor is reliable and valid.)
Raspberry Pi setup and troubleshooting(a Raspberry Pi is a low-cost system-on-a-chip (SOC), often used in conjunction with various sensing applications.)
Without the Phenotyping Core, startups using only their inhouse resources would be hard pressed to duplicate these sophisticated analyses and tests. Failure rate among these young firms would likely be much greater.
In addition to Phenotyping and Data Science, at the Donald Danforth Plant Science Center, additional Core Facilities include the Advanced Bioimaging Laboratory, Proteomics and Mass Spectrometry Facility, Plant Growth Facility, and Plant Transformation Facility.
Shared Services at BioGenerator and BioSTL
Figure 2. BioGenerator Wet and Dry Labs (image source)
Usage arrangements are very flexible. For example, companies can lease lab benches for extended periods of time or as little as one day per week (even on a Sunday!). Lab space consists of both a large, common area, and private labs; the latter are especially useful for growing teams in need of space for sensitive or proprietary equipment, as access can be restricted to designated employees.
Infrastructure and Utilities
Common infrastructure includes personal protection equipment (emergency showers and eyewash stations, and vacuum hoods for lab equipment), public WiFi, HVAC, overhead power hookups for lab equipment, and the use of backup generators to guard against city power outages. Rental of a lab bench conveys use of shared office workspace and meeting/conference facilities on a time available basis.
Lab Equipment
Much lab equipment is provided by BioGenerator. In addition, companies can bring their own equipment into the shared or private labs, subject to approval by the BioGenerator staff. A list of the common equipment available in the labs is included at the end of this article.
Companies other than those in the BioSTL/BioGenerator portfolio can apply for facilities usage, though the latter are prioritized (Technically, BioGenerator is the finance arm of BioSTL. However, it also provides portfolio startup companies with facilities and services, in addition to guiding them to sources of funding).
Use of Agilent HPLC at BioGenerator
BioGenerator researchers engage in a variety of highly technical tasks. One of these tasks is small-molecule drug discovery (For those who care to delve into details, a good description of small-molecule drugs versus biologics can be found here).
The below use cases —which are included to give a glimpse into shared services’ sophistication in the innovation districts— indicate how researchers might use the Agilent High Performance Liquid Chromatography (HPLC), a formidable lab bench machine, to discover new small-molecule drugs.
Target and Lead Characterization:
Purity assessment: HPLC effectively separates and purifies small molecules, including target proteins and candidate drugs. By analyzing the chromatogram, researchers can ensure sample purity and identify potential contaminants.
Quantitation: Quantifying target protein levels or drug concentrations in biological samples helps researchers understand their distribution, metabolism, and efficacy. HPLC offers accurate and sensitive measurement compared to other techniques.
Metabolite identification: Understanding drug breakdown products (metabolites) is crucial for safety assessments. HPLC coupled with mass spectrometry (LC-MS) helps identify and characterize metabolites to evaluate potential toxicity and drug stability.
Hit Identification and Lead Optimization:
High-throughput screening (HTS): Although HTS often utilizes automated plate readers, HPLC can be integrated for specific assays where separation of compounds is necessary. For example, HPLC can measure specific metabolites arising from compound activity, providing richer data than simple absorbance readings.
Fractional purification: In HTS campaigns, active fractions containing promising lead compounds need further purification. HPLC effectively isolates these leads based on their individual chromatographic properties.
Structure-Activity Relationship (SAR) studies: Analyzing the retention time of structurally similar compounds on HPLC columns helps understand how modifications affect their interaction with the target protein, guiding further optimization.
Additional Applications:
Quality control: Ensuring drug purity and consistency throughout the development process is critical. HPLC plays a crucial role in quality control procedures for both preclinical and clinical-grade drug formulations.
Formulation development: Selecting the optimal drug formulation for bioavailability and stability involves analyzing drug behavior in different solvents and carriers. HPLC helps researchers test and optimize formulations for maximum efficacy and safety.
Where are the Services?
Thus far, the BioGenerator shared services description might sound like mere equipment and infrastructure. However, there are a few points that make them services.
Utilities
First, BioGenerator infrastructure operation, such as that of public WiFi, HVAC, power, and emergency generators is the responsibility of BioGenerator or BioSTL staff, not of the tenant companies. This is takes a significant pressure off startups, as an electrical outage can be disastrous for labs because in-progress experiments could be disrupted with calamitous data loss.
Buying and Bartering
Secondly and more importantly, services are often bought or bartered among the portfolio and resident BioGenerator companies. For example, a company might have ample molecular biology expertise, but lack capability in computational modeling. Thus, it could hire another tenant company possessing this expertise. Reimbursement might entail payment in money.
Conversely, bartering for services could also be an option. Perhaps the second company lacks high-performance liquid chromatography experts. This second startup might accept analysis requiring the Agilent HPLC in exchange for a high-performance computational modeling analysis.
Value-Add
This informal, relational, and transactional service marketplace accentuates the value-add of an innovation district.
Innovation districts are place-specific agglomerations of people, information, knowhow, and infrastructure. People working in close proximity to each other in this environment are likely to “happily collide” with each other and exchange ideas as well as buy and barter for services.
As in the Danforth Center’s Phenotyping Core, were these sophisticated services not made available to BioGenerator tenant companies, they would be hard pressed to duplicate them with only their in-house resources. Startup success rate is thus likely enhanced by the shared services available.
Observations and Conclusions
What is really interesting about the use of shared services at the St. Louis innovation districts is that the services provided are close to core.
Sharing Expertise
For example, plant phenotyping is squarely in the plant scientists’ expertise repertoire. Likewise, chromatography resides in the molecular biologists’ expertise. These are both far closer to core than much of traditional outsourcing’s scope, which usually includes activities such as payroll processing, food services, and facilities maintenance.
Make Meaningful Connections
In addition, as noted above, the buy-and-barter arrangements at BioGenerator accentuate an innovation district’s reason for being. Getting people into the same physical place has value that cannot be matched by using virtual meetings on Zoom. Innovation districts need to be inclusive, inviting places in which people work together, eat lunch together, and have fun hanging out.
Compete Globally
Third, and perhaps most importantly, we stress again that the startups and other tenant companies compete in the global marketplace on the basis of both their built-out competencies and the externally-provided shared services. Competition is between ecosystems, not just companies.
Innovation districts thus need both wide and deep expertise. They also need a wealth of infrastructure, facilities, and other resources. Moreover, they need to ensure that these resources are well-aligned with making their portfolio companies successful.
Reducing Costs Increases Your Chances of Success
Finally, as I have emphasized throughout this article, shared services availability in the innovation districts increases startup success rate. Young companies are provided with resources critical to their future, which they would be hard pressed to duplicate with scarce in-house capital.
Appendix: BioGenerator Lab Equipment List
In addition to standard lab equipment (refrigerators, freezers [both -20C and -80C], water baths, heat blocks, vortexors, milliQ water supply, wet ice, dry ice, gas cylinders, electrophoresis power supplies, small benchtop microfuges etc), Biogenerator Accelerator Labs makes the following larger pieces of equipment available to tenant companies:
Beckman Avanti J30i high speed centrifuge (floor model)
Beckman Avanti J26XPi high speed centrifuge (floor model)
Wide selection of rotors for above centrifuges
Beckman LE-80 ultracentrifuge (floor model)
Limited selection of rotors for above ultracentrifuge (SW-28, VTi -50, 50-Ti)
Eppendorf 5810R refrigerated benchtop centrifuge
Sorvall RT7 refrigerated benchtop centrifuge
IST 7100R refrigerated floor shaker / incubator
IST 4075R refrigerated benchtop shaker / incubator
IST 3075R refrigerated benchtop shaker / incubator (three available)
Biosafety cabinets for tissue culture, Class 2, type A2
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