Microfluidics > University Startups

I have reviewed several interesting microfluidic opportunities from our University Partners over the past few months and I thought it might be an appropriate time to share some knowledge I have gained from speaking with microfluidic companies and thought leaders. 

The concept of microfluidics is fairly straightforward – to take old, larger fluid handling devices and miniaturize them.  Decreasing the size of the device decreases the use of expensive liquid reagents and wasting of valuable sample material, allows for greater functional flexibility (compacting 3 different functions requiring 3 separate machines into one new device), and enables greater portability. 

The rate of innovation in microfluidics right now is astonishing.  Valve density (the gold standard for microfluidic progress) is doubling every four months, shattering Moore’s Law.   Universities are at the vanguard of microfluidic innovation and have spunout numerous companies that are poised to become future market leaders.

• Accuri Cytometers (University of Michigan)
• Advanced Liquid Logic (Duke University)
• Caliper (UPenn)
• HandyLab (University of Michigan)
• Helixis (Caltech)
• Euveda Biosciences (Johns Hopkins)
• Fluidigm (Caltech)
• Nanogen (UCSD)
• On-Q-ity (Mass General)
• Seventh Sense Biosciences (University of Michigan)

A common challenge for microfluidic companies is to find the best commercial application for their unique microfluidic technology.  Applications can be broken down into roughly four segments: academic research tools; pharma drug discovery; personalized medicine; and defense / public safety.  Personalized medicine represents the largest market opportunity, but also has the most significant regulatory, execution, and capital requirement hurdles.

In looking at microfluidic opportunities, I focus my attention on two things.  First, I want to see the presence of a strong CEO or Executive Chairman.  The microfluidic/IVD market is very competitive and I want to invest in someone who knows how to navigate the waters.  Second, I want to see a clear path for achieving commercial traction.  Selling into pharma or large medical networks is much harder than in the past and those sales are typically lumpy and unpredictable.  An alternative – and what I keep an eye for – is a plan to sign a distribution agreement with a strong partner (Fisher, Invitrogen, Millipore, Roche, etc.) who knows how to sell into the desired target market. 

The microfluidic segment of the in vitro diagnostics (IVD) market is poised for significant growth over the next five years and this is attracting the attention from large acquisitive corporations such as Abbott and even non-traditional life science companies like IBM.  Several University Partner companies have been acquired (Handy Labs, Helixis) recently and we expect the pace of microfluidic acquisitions to accelerate over the next few years as life science and tech corporations look to diversify their revenue streams.