Tau Ventures focuses on AI investments in healthcare and enterprise, but we are also fascinated by automation and very occasionally invest in that space. Case in point Elemental Machines which provides Lab as a Service (LaaS) — off-the-shelf sensors measuring environmental metrics like temperature, pressure and motion to produce drugs and foods at high quality. One area of particular interest for us is how robotics is playing an increasing role in life sciences.
Previously, we looked at the high growth potential of robotics in the life sciences industry. However, to take a deeper dive, it is important to look at case studies of specific high performing startups in the industry. Most companies focusing on robotics in life sciences are targeted towards large pharmaceuticals and are less accessible to smaller companies and R&D institutions. Thus, here we explore Opentrons, an open software robotics pipetting product that caters to small biotech companies and research instituitions. As a growth stage startup, Opentrons can represent what a robotics in life science startup can look like, as well as key aspects of the niche market.
Opentrons Business Model as Case Study
Software:
Opentron’s value proposition does not fall into the overall trend shift that we have been seeing in hardware businesses across different sectors: a shift towards software as service. Instead, the software services are provided as open source code bases, which keeps inline with the culture of its target users in academia and research. However, this may be an area that Opentrons could potentially capitalize on by relying more on offering full code writing service for bespoke software protocols and they have begun to expand such services online.
This means the following:
- Startups looking to enter the software as a service space can benefit from integrating open source culture
- Software troubleshooting support is just as important, if not more, than hardware troubleshooting support for customers
- Open source code and software service do not need to be mutually exclusive in a business model
Hardware:
Currently, Opentrons relies on selling its hardware to small businesses, startups, and institutes as its business model, made available by its low pricings. One should note that Opentrons sell hardware accessories such as robotic pipettes of various volumes, pipette tips and PCR /heating blocks that are specific to Opentrons robots. This implies that consumers must purchase accessories upfront to functionally use the technology, and in the case of pipette tips, purchase them periodically en masse, since they are non exchangeable from traditional lab tips and solely supplied by Opentrons.
Strengths & Weaknesses:
Opentrons strengths and weaknesses are representative of the field of robotics in life sciences in general. Overall, Opentron’s strengths may also be its largest weakness since the characteristics that differentiate it from its competitors is its strong reliance on open-source software. While researchers who are both adept in python coding and utilize protocols that require sample pipetting have a lower barrier of entry into using its infrastructure, researchers that do not have prior training in software coding and/or python may find a larger learning curve awaiting, which potentially can turn target customers off from purchasing or keeping use of the products.
In addition, the hardware business is tricky. Recent supply chain shortages have reminded various industries including tech on how fragile reliance on raw materials and parts are. Furthermore in times of stability, hardware businesses require strong IT system support and robust troubleshooting for a reliable customer experience.
Reliability on software expertise and hard-ware flexibility may create a weakness; we think this may present a potential gap for new players in robotic startups in life sciences targeting small businesses, startups, or research groups. Other competition include current large pharmaceutical robotics companies, who may also consider pivoting for smaller scale robotics, although it would require a large change towards open software development and even a large change in business model.
Note from Amit Garg: Primary author for this article is Sharon Huang. Originally published on “Data Driven Investor,” am happy to syndicate on other platforms. I am the Managing Partner and Cofounder of Tau Ventures with 20 years in Silicon Valley across corporates, own startup, and VC funds. These are purposely short articles focused on practical insights (I call it gl;dr — good length; did read). Many of my writings are at https://www.linkedin.com/in/amgarg/detail/recent-activity/posts and I would be stoked if they get people interested enough in a topic to explore in further depth. If this article had useful insights for you comment away and/or give a like on the article and on the Tau Ventures’ LinkedIn page, with due thanks for supporting our work. All opinions expressed here are my own.
