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eBioinformatics Will Put $10 Million Toward Efforts to Reach Customers


PLEASANTON, Calif.--With money brought in through a second financing round last month, eBioinformatics will expand sales and marketing efforts to put its name on the map and to distinguish itself from its competitors, namely DoubleTwist and Compugen’s LabOnWeb. The company raised $10 million venture capital equity financing from three new investors--Colonial First State Private Equity, International Biotechnology Trust, CSL Limited--and several returning investors--Rothschilds Australian Bioscience Trust, Allen & Buckeridge, and 3iBioscience Investment Trust--each of whom participated in the company’s first round that brought in $2.5 million last year.


CEO Howard Goldstein told BioInform that eBioinformatics’ year-old online life science research portal,, has been steadily gaining attention from the biology community and now claims 6,000 customers--90 percent of them academic--who have visited the site at least three times.


Goldstein estimated that the typical BioNavigator user will spend between $500 and $1,000 per year in user fees and another $3,000 on e-commerce purchases from partners at the site. Asked how eBioinformatics expected to generate the revenues necessary to pay back its investors, Goldstein said, “It’s a numbers game. If we were thinking we were only ever going to attract 6,000 users, then in fact we might not be able to pay it back. But we believe that over the next three or four years we’ll get up near 40,000 users.”


That estimate, he said, is based on industry demographics. “There are somewhere between 300,000 and 400,000 [life] scientists. If you eliminate the pharmaceutical industry, there are still 200,000 scientists we can address. If we can get 40,000 of those, we’ll be very happy and we’ll have no problem paying back our investors.”


To be sure, many industry insiders are skeptical of the bioinformatics internet portal business model. Even among vendors of the 220-plus software products available at the BioNavigator site, some told BioInform they wondered how companies such as eBioinformatics and DoubleTwist will make money. A product manager at one of eBioinformatics’ partner com-panies said, “I don’t see how either company will make the sort of money necessary to cover these costs. Scientists are used to free stuff. I’m not sure they will pay money for the not-free stuff.”


Goldstein, who has 20 years’ experience in life-science-industry sales with companies including Molecular Dynamics, Molecular Devices, Synteni, and Incyte, argued that his company is in a better position than its competitors for several reasons. For one, he said, eBioinformatics’ costs are relatively low: “We only burn about $325,000 a month.”


And Goldstein believes eBioinformatics’ approach is right for the market it aims to capture. Unlike DoubleTwist, eBioinfor-matics is strictly targeting the academic community and small biotech companies, not major pharmaceutical users or larger biotechs. “The average university researcher has an annual budget of $30,000 to $50,000, so they can’t afford a $10,000 subscription unless they absolutely know that it’s going to work,” Goldstein said, citing the rate for a commercial DoubleTwist membership. “But they can afford $1,000 over the year because they know they’re only going to be charged for what they’re using.”


Indeed, once visitors have logged on, getting them to spend money at BioNavigator isn’t too much trouble, Goldstein claimed. Instead, he said, “mostly what we have is a recognition issue. How do you get people to recognize that it’s even there?”


DoubleTwist seems to have figured that one out: the company’s name has appeared in several major business magazines in recent weeks, and was mentioned in the same paragraph as Incyte and Celera in the Wall Street Journal. With $10 million, perhaps eBioinformatics can start to catch up.


--Adrienne Burke

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