MBI Helps Biotech Companies De-Risk and Expand

2/28/12Follow @XconomyDET

MBI International, a wholly owned subsidiary of the Michigan State University Foundation, has an ambitious goal: To help Michigan’s bioeconomy sector grow by working with companies to negotiate the “valley of death”—taking their early-stage innovations to commercial viability, and, if failure is imminent, helping companies fail quickly before too much money is spent.

That MBI has experienced success is impressive on its own, and even more so considering that as recently as 10 years ago, before MBI brought a new CEO on board and refined its mission, many state officials privately worried that the heavily government-funded enterprise was a money pit.

MBI mostly works with small companies that don’t have the resources to build their own state-of-the-art pilot plant to test inventions from the lab bench. If a potential product survives the scaling-up process, adds Doug Gage, director of MSU’s Bioeconomy Network, MBI has often helped de-risk it—or test the technology on a large scale—to the point that it’s more attractive to investors, which strengthens the entire bioeconomy ecosystem.

“We think this is a very forward-looking approach, and I don’t think there is anything like it in the country associated autonomously with a university,” Gage says. “We have about 30 highly trained scientists and engineers with an industrial background to systematically address a company’s risks by asking the right questions and setting up the proper tests. Our model is potentially a game-changer for the industry.”

MBI was founded as a 501(c)(3) company in the 1980s and funded by federal, state, and private foundation money. It began as an incubator whose mission was to help diversify Michigan’s economy. It was built near MSU, where there were already a lot of people working in agriculture, plant science, and biotech, to commercialize the technology coming out of the university, particularly in the bio-based agriculture sector.

There were some early successes—most notably, work done in collaboration with Cargill and MSU researchers on a biodegradable plastic bag that was later used by the Sun Chips brand. But Gage says that by the beginning of the last decade, MBI found itself in a “challenging financial situation.” As a former staffer in the Michigan House of Representatives, I remember conversations where legislators were beginning to question if the millions they were allocating to MBI was worth it. (A Michigan Department of Agriculture official who was a legislator in the 1990s confirms this.)

In 2005, recognizing that a new direction was needed, MBI became a subsidiary of the MSU Foundation, which immediately stabilized its finances. The MSU Foundation bought MBI as a way to bring MSU inventions to market, but a year after the purchase the vision changed. Instead of serving as a home for small companies working on research-related projects, MBI focused on its current strategy of making early-stage technology in the bio-based ag and renewable materials sectors more robust.

“The concept of taking biomass and processing it and converting it to something useful or a product sold in the marketplace is a very challenging problem,” Gage says. “But it’s an area with a lot of interest. It’s very different from, say, medical devices, where you know your market and price points, and you have an investment … Next Page »

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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