Bio-based sustainable chemical intermediates for polymer bio-surfactants, bio-lubricants

Shivani GargEntrepreneurial LeadGraduate student, 3.5 yrs in biochemistry

Dr. Basil NikolauPrincipal InvestigatorProfessor, 30 yrs in biochemistry

Dr. Peter KeelingI-Corps MentorEntrepreneur, 30 yrs in biotechnology industry

I-Corps Team

Bio-based chemicalintermediates

CBiRC, Iowa State University

Interviews conducted in total – 62+38 = 100

Two minute video - http://www.youtube.com/watch?v=ZyGr-eoONqo&feature=youtube_gdataOne minute video - http://www.youtube.com/watch?v=xY9nXzlzEHA&feature=youtube_gdata

Value proposition

Problem

• Non-renewable, petroleum derived feedstock for surfactant, lubricant industry

Solution

• Sustainable, bio-based replacement

• Higher performance

• Improved cold temperature tolerance of detergents, lubricants

Features of value proposition

• Bi-functional molecules

• Flexibility in chain length

• Flexibility in branching

$1 trillion petrochemical market

Bio-based chemicals growing at 15% p.a.

$24 bnsurfactants

Growing market opportunity

Position in Value Chain

OmegaChem

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

• Production, yield, quality• Match customer’s

product specs

• Manufacturin

g facility• IP

• Human resources,

capital

Problem - Non-

renewable feedstock for

making polymer Solution

(Product) – Bio-based and

sustainable replacement

Features - Bi-functional and customizable

• Co-create value

proposition• Customer goodwill and

trust• Customer communities

• Physical product • Indirect

channel • Wholesale

• Existing market Polymer

manufacturers, Biotech

companies,

• New market -Novel bio-

plastic companies?

• Multi-sided market?

• Sell bio-based monomers• Added value pricing based on

customization of products• Licensing?

• Fixed – Capital• Variable – Manufacturing, Bio-

mass

Business Model Canvas 1.0

Value prop. hypothesis: Bio-based and sustainableCustomer segment hypothesis: Polymer manufacturers, new marketsTest: Talked to biochemical companies

Talked to potential customers

Value Proposition, Customer Segments: Experiments

Biochemical companies, Market research (15)

Market Research Analyst

R&D Director

Research Scientist

Senior ScientistVice-President, Technology Development Senior Scientist

Senior Business Development Manager

Surfactants: new market ($24bn)Monomer

manufacturer

Surfactant Formulator

Polymerformulator

Polymer user

Surfactant user

Consumer facingcompany

Consumer

Value Proposition, Customer Segments: Results

Monomer manufacturer

Polymerformulator

Polymer user

Consumer facingcompany

Consumer

“Have you considered surfactants

space?” - DSM

Problem - Non-renewable feedstock

Solution – Bio-based,

sustainable replacement

Features - Bi-functional,

customizable• ‘Drop-in’

monomers• Diacids (chain length: C10-C16)

• New functionalities (cyanide, amine)

• Existing market Polymer

manufacturers, Biotech

companies,Surfactants,

Home & Personal Care

sector

• New market -Novel bio-

plastic companies?

• Multi-sided market?

Business Model Canvas 4.0Value Proposition, Customer Segments: Iteration

Channel hypothesis: Indirect channel of wholesaleTest: Talked to chemical distributors

Here’s what we did…

Channels: Experiments

Distributors (9)

Biochemical industry executives (3)

Pivot: Entry barriers are key

Distributor

Distributor

Monomer manufacturer

Surfactant formulator

Polymerformulator

Polymer user

Surfactant user

Consumer facingcompany

Consumer

Channels: Results

High entry barriers(Petro-based is hard to dislodge.)

Low entry barriers(Market pull for green products)

“Petro industry wishes that you

guys did not exist!”

- Draths

Business Model Canvas 5.0Problem - Non-

renewable feedstock

Solution – Bio-based, sustainable

replacement•Regional supply of surfactant raw-

material• Avoidance of

single material sourcing (petro)• Green

Features - Bi-functional,

customizable• ‘Drop-in’

monomers

Existing markets• Polymer

manufacturers

• Biotech companies

Customer in value chainFormulator companies

Existing market sectors

• Surfactants

• Home & Personal Care sector

• Physical product

•Indirect channel • Wholesale

Distributors

Channels: Iteration

Customer Relationship Hypothesis: Co-create value propositionTests: Talked to surfactant/lubricant companies

Here’s what we did…

Catalyst Research Engineer

Tribology Section Leader

Research Scientist

Senior Scientist

Principal Scientist

Director, R&D

Program Manager

Biobased Chemicals Analyst

Vice-President, R&D

Business Marketing Leader

President, Personal Care

Global Head, R&D

Lubricants (4)Surfactants (4)

Other bio-based companies (6)

Customer Relationships: Experiments

Senior Scientist, R&D

Technical Director

Here’s what we found…

Distributor

Monomer manufacturer

Surfactant formulator

Surfactant user

Consumer facingcompany

ConsumerMarket Pull(Sustainability

agenda)

Surfactant users influence surfactant formulator decisions, so need to partner with surfactant users first!

Green Panel – Focus on reducing petroleum based products

Customer Relationships: Results

Decision Makers

Business Model Canvas 6.0Problem - Non-

renewable feedstock

Solution – Bio-based, sustainable

replacement•Regional supply of surfactant raw-

material• Avoidance of

single material sourcing (petro)• Green• High-

performance

Features - Bi-functional,

customizable• ‘Drop-in’

monomers

Customer in value chainFormulator companies

Existing market sectors

• Surfactants

• Lubricants

• Home & Personal Care sector

•Co-create value proposition

• Customer goodwill and trust• Customer communities

• Trade-shows, PR• Conferences,

surveys

Customer Relationships: Iteration

Revenue Model Hypothesis: Value-based pricing, licensing Tests: 1. Developed a product sheet

2. Talked to 7 surfactant companies3. Talked to 6 production economics

experts

Payment Flow Hypothesis

Distributor

Monomer manufacturer

Surfactant formulator

Surfactant user

Consumer facingcompany

Consumer

Revenue model: Hypothesis

Biomass supplier Biomass 15

c/lb*Biomass Range 5-

20c/lb

Monomer ?Detergent alcohols

80c/lb

Formulation ?Formulated

Surfactant 90c/lb

Surfactant 100 c/lb*

Formulated Detergent 100c/lb

Detergent 200 c/lb*

10% Surfactant in Detergent

Product

Decision Makers

*ICIS Market Intelligence, 2012

Payment Flow

Distributor

Monomer manufacturer

Surfactant formulator

Surfactant user

Consumer facingcompany

Consumer

Revenue model: Result 1

Biomass supplier Biomass 15

c/lb*Biomass Range 5-

20c/lb

Monomer 80 c/lbDetergent alcohols

80c/lb

Formulation 90 c/lbFormulated

Surfactant 90c/lb

Surfactant 100 c/lb

Formulated Detergent 100c/lb

Detergent 200 c/lb

10% Surfactant in Detergent

Product

Decision Makers

*ICIS Market Intelligence, 2012

Scale up is the key

Revenue model: Result 2

Less than 100 c/lb is achievableOptimized scale up (~500,000 lb/day)

Earlyvangelists

“You give us 1kg, we

can evaluate.”

Business Model Canvas 7.0

• Production, yield, quality• Match customer’s

product specs • Constant

innovation

• Sell bio-based monomers• Added value pricing based on

customization of products• Create demand by partnering with

Surfactant Users and then sell to Formulators• Licensing

- Cheapest bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

- Surfactant Users (P&G)

Revenue Model: Iteration

Partners Hypothesis: Bio-mass suppliers, scale-up, technology providers, utility providers, surfactant usersTests: Talked to potential partners

Here’s what we hypothesized…

Distributor

Partners

Surfactant formulator

Surfactant user

Consumer facingcompany

Consumer

Partners: Hypothesis

Biomass supplier

Decision Makers

Monomer manufacturer

sStart-up

Incubators

Market Research

Scale-up providers

Technology partners

Here’s what we did…Start-up

Incubators (4)

Market Research

(3)

Scale-up providers

(4)

Technology partners

(3)

Partners: Experiments

Business Model Canvas 8.0-Market Research

Agencies

- Start-up incubators

Cheapest bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

- Surfactant Users (P&G)

Partners: Iterate

What’s next?State funding (i6 grant)Federal funding (SBIR)

First to Last Business Model Canvas

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

• Production, yield, quality• Match customer’s

product specs

• Manufacturin

g facility• IP

• Human resources,

capital

Problem - Non-

renewable feedstock for

making polymer Solution

(Product) – Bio-based and

sustainable replacement

Features - Bi-functional and customizable

• Co-create value

proposition• Customer goodwill and

trust• Customer communities

• Physical product • Indirect

channel • Wholesale

• Existing market Polymer

manufacturers, Biotech

companies,

• New market -Novel bio-

plastic companies?

• Multi-sided market?

• Sell bio-based monomers• Added value pricing based on

customization of products• Licensing?

• Fixed – Capital• Variable – Manufacturing, Bio-

mass

Business Model Canvas 1.0First Canvas

Business Model Canvas 8.0

• Production, yield, quality• Match customer’s

product specs • Constant

innovation

Problem - Non-renewable feedstock

Solution – Bio-based, sustainable

replacement•Regional supply of surfactant raw-

material• Avoidance of

single material sourcing (petro)• Green• High-

performance

Features - Bi-functional,

customizable• ‘Drop-in’

monomers

• Sell bio-based monomers• Create demand by partnering with

Surfactant Users and then sell to Formulators• Licensing

• Manufacturing

facility• IP

• Human resources,

capital• IHS (Market

Info)

-Market Research Agencies

- Start-up incubators

Cheapest bio-mass suppliers

- Contractual scale-up

- Technology providers

- Surfactant Users (P&G)

Customer in value chainFormulator companies

Existing market sectors

• Surfactants

• Lubricants

• Home & Personal Care sector

• Fixed – Capital• Variable – Manufacturing, Bio-mass

•Co-create value proposition

• Customer goodwill and trust• Customer communities

• Trade-shows, PR• Conferences,

surveys

• Physical product

•Indirect channel • Wholesale

Distributors

Final Canvas

Evolution of Canvas

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

• Production, yield, quality• Match customer’s

product specs

• Manufacturin

g facility• IP

• Human resources,

capital

Problem - Non-

renewable feedstock for

making polymer Solution

(Product) – Bio-based and

sustainable replacement

Features - Bi-functional and customizable

• Co-create value

proposition• Customer goodwill and

trust• Customer communities

• Physical product • Indirect

channel • Wholesale

• Existing market Polymer

manufacturers, Biotech

companies,

• New market -Novel bio-

plastic companies?

• Multi-sided market?

• Sell bio-based monomers• Added value pricing based on

customization of products• Licensing?

• Fixed – Capital• Variable – Manufacturing, Bio-

mass

Business Model Canvas 1.0

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

• Production, yield, quality• Match customer’s

product specs

• Manufacturin

g facility• IP

• Human resources,

capital• SRI (Market

Info)

Problem - Non-

renewable feedstock for

making polymer Solution

(Product) – Bio-based and

sustainable replacement

Features - Bi-functional and customizable• ‘Drop-in’

monomers• Diacids

• Co-create value

proposition• Customer goodwill and

trust• Customer communities

• Physical product • Indirect

channel • Wholesale

• Existing market Polymer

manufacturers, Biotech

companies,Surfactant

manufacturers

• New market -Novel bio-

plastic companies?

• Multi-sided market?

• Sell bio-based monomers• Added value pricing based on

customization of products• Licensing?

• Fixed – Capital• Variable – Manufacturing, Bio-

mass

Business Model Canvas 2.0

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

• Production, yield, quality• Match customer’s

product specs

• Manufacturin

g facility• IP

• Human resources,

capital• SRI (Market

Info)

Problem - Non-renewable feedstock

Solution – Bio-based,

sustainable replacement

Features - Bi-functional,

customizable• ‘Drop-in’

monomers• Diacids (chain length: C10-C16)

• New functionalities (cyanide, amine)

• Co-create value

proposition• Customer goodwill and

trust• Customer communities

• Physical product • Indirect

channel • Wholesale

• Existing market Polymer

manufacturers, Biotech

companies,Surfactant

manufacturers

• New market -Novel bio-

plastic companies?

• Multi-sided market?

• State funding, SBIR funding • Sell bio-based monomers• Added value pricing based on

customization of products• Licensing

• Fixed – Capital• Variable – Manufacturing, Bio-

mass

Business Model Canvas 3.0

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

• Production, yield, quality• Match customer’s

product specs

• Manufacturin

g facility• IP

• Human resources,

capital• SRI IHS

(Market Info)

Problem - Non-renewable feedstock

Solution – Bio-based,

sustainable replacement

Features - Bi-functional,

customizable• ‘Drop-in’

monomers• Diacids (chain length: C10-C16)

• New functionalities (cyanide, amine)

• Co-create value

proposition• Customer goodwill and

trust• Customer communities

• Physical product • Indirect

channel • Wholesale

• Existing market Polymer

manufacturers, Biotech

companies,Surfactants,

Home & Personal Care

sector

• New market -Novel bio-

plastic companies?

• Multi-sided market?

• State funding, SBIR funding • Sell bio-based monomers• Added value pricing based on

customization of products• Licensing

• Fixed – Capital• Variable – Manufacturing, Bio-

mass

Business Model Canvas 4.0

Business Model Canvas 4.3

• Production, yield, quality• Match customer’s

product specs

Problem - Non-renewable feedstock

Solution – Bio-based, sustainable

replacement• Local supply of

surfactant raw-material

• Avoidance of single material sourcing (petro)• Green

Features - Bi-functional,

customizable• ‘Drop-in’

monomers

• Sell bio-based monomers• Added value pricing based on

customization of products• Licensing

• Manufacturing

facility• IP

• Human resources,

capital• IHS (Market

Info)

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

Existing markets• Polymer

manufacturers

• Biotech companies

Customer in value chainFormulator companies

Existing market sectors

• Surfactants

• Home & Personal Care sector

• Fixed – Capital• Variable – Manufacturing, Bio-mass

• Co-create value

proposition• Customer goodwill and

trust• Customer communities

• Physical product

•Indirect channel • Wholesale

Distributors

Business Model Canvas 5.0

• Production, yield, quality• Match customer’s

product specs

Problem - Non-renewable feedstock

Solution – Bio-based, sustainable

replacement•Regional supply of surfactant raw-

material• Avoidance of

single material sourcing (petro)• Green

Features - Bi-functional,

customizable• ‘Drop-in’

monomers

• Sell bio-based monomers• Added value pricing based on

customization of products• Licensing

• Manufacturing

facility• IP

• Human resources,

capital• IHS (Market

Info)

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

Existing markets• Polymer

manufacturers

• Biotech companies

Customer in value chainFormulator companies

Existing market sectors

• Surfactants

• Home & Personal Care sector

• Fixed – Capital• Variable – Manufacturing, Bio-mass

• Co-create value

proposition• Customer goodwill and

trust• Customer communities

• Physical product

•Indirect channel • Wholesale

Distributors

Business Model Canvas 6.0

• Production, yield, quality• Match customer’s

product specs

Problem - Non-renewable feedstock

Solution – Bio-based, sustainable

replacement•Regional supply of surfactant raw-

material• Avoidance of

single material sourcing (petro)• Green• High-

performance

Features - Bi-functional,

customizable• ‘Drop-in’

monomers

• Sell bio-based monomers• Added value pricing based on

customization of products• Licensing

• Manufacturing

facility• IP

• Human resources,

capital• IHS (Market

Info)

- Bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

Customer in value chainFormulator companies

Existing market sectors

• Surfactants

• Lubricants

• Home & Personal Care sector

• Fixed – Capital• Variable – Manufacturing, Bio-mass

•Co-create value proposition

• Customer goodwill and trust• Customer communities

• Trade-shows, PR• Conferences,

surveys

• Physical product

•Indirect channel • Wholesale

Distributors

Business Model Canvas 7.0

• Production, yield, quality• Match customer’s

product specs • Constant

innovation

Problem - Non-renewable feedstock

Solution – Bio-based, sustainable

replacement•Regional supply of surfactant raw-

material• Avoidance of

single material sourcing (petro)• Green• High-

performance

Features - Bi-functional,

customizable• ‘Drop-in’

monomers• Sell bio-based monomers• Added value pricing based on

customization of products• Create demand by partnering with

Surfactant Users and then sell to Formulators• Licensing

• Manufacturing

facility• IP

• Human resources,

capital• IHS (Market

Info)

- Cheapest bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

- Surfactant Users (P&G)

Customer in value chainFormulator companies

Existing market sectors

• Surfactants

• Lubricants

• Home & Personal Care sector

• Fixed – Capital• Variable – Manufacturing, Bio-mass

•Co-create value proposition

• Customer goodwill and trust• Customer communities

• Trade-shows, PR• Conferences,

surveys

• Physical product

•Indirect channel • Wholesale

Distributors

Business Model Canvas 8.0

• Production, yield, quality• Match customer’s

product specs • Constant

innovation

Problem - Non-renewable feedstock

Solution – Bio-based, sustainable

replacement•Regional supply of surfactant raw-

material• Avoidance of

single material sourcing (petro)• Green• High-

performance

Features - Bi-functional,

customizable• ‘Drop-in’

monomers

• Sell bio-based monomers• Create demand by partnering with

Surfactant Users and then sell to Formulators• Licensing

• Manufacturing

facility• IP

• Human resources,

capital• IHS (Market

Info)

-Market Research Agencies

- Start-up incubators

Cheapest bio-mass suppliers

- Contractual scale-up

- Technology providers

-Utility providers

- Surfactant Users (P&G)

Customer in value chainFormulator companies

Existing market sectors

• Surfactants

• Lubricants

• Home & Personal Care sector

• Fixed – Capital• Variable – Manufacturing, Bio-mass

•Co-create value proposition

• Customer goodwill and trust• Customer communities

• Trade-shows, PR• Conferences,

surveys

• Physical product

•Indirect channel • Wholesale

Distributors