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NewbieWatch: Softberry Speaks Softly but Carries a Large Customer Base

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Software startup Softberry has managed to do something few other companies have achieved: Over the past 10 months, it has licensed its gene prediction software to 40 companies, including Celera, Incyte, and Merck, without spending a cent on marketing or issuing a single press release.

"We were able to strike about 40 licenses with a tiny staff because … our gene-finding programs are quite well-known, and our underlying work, developed in academia, was heavily published, which has proven to be the best advertising," said Valery Sagitov, Softberry’s president. "All our licensees contacted us themselves."

Softberry, which charges $10,000-$15,000 for an annual site license, grew out of work done at the university in Novosibirsk, Russia, where a number of the company’s nine employees spent more than a decade working in bioinformatics.

Sagitov, who co-founded InforMax, said that the Softberry’s main products, Fgenes and Fgenesh software, became popular because they offered features not available in other programs.

"Most large bioinformatics companies, like InforMax or Lion focus mainly on data mining, storage, and delivery," said Sagitov, who opened Softberry’s offices in White Plains, NY, when the company was formed last year. "By contrast, Softberry focuses on generating mainly new data — like biologists working at a wet bench, but using informatics tools."

Although Sagitov conceded that Softberry’s software is not more accurate for human or other mammalian genomes than the competition’s products, he noted that Softberry went one step further to fine-tune the parameters for a wider variety of organisms, including monocot plants. In addition, he said Softberry’s software was faster than Genescan.

Klaus Heumann, CEO of Biomax in Martinsried, Germany, who recently signed a license for Softberry’s customized human genome database of predicted gene sequence and protein homologies, said the startup’s software is among the best.

"The exclusive Fgenesh++ Softberry software is one of the most powerful systems for gene prediction available and gives substantially more accurate predictions than other commonly used approaches," said Heumann.

"Softberry gene prediction programs can produce ab initio annotation of the whole human genome in several hours."

Yet, despite its solid reputation and growing business as both a software provider and consultancy, Sagitov said the company is now facing new challenges.

"In several years [our gene prediction tools] will be obsolete — all genes will be determined by homology," Sagitov conceded. "We have a number of great products besides gene finders, and several more are in the pipeline. But these products are little known and so far not very popular."

In an effort to stay ahead, Sagitov said the company, which has raised several hundred thousand dollars in venture capital to date, is looking to broaden its revenue base through sales of new products.

In addition to its gene prediction tools, Softberry is now looking to drum up sales of its genome comparison tools DBSCAN and Scan2, protein sub-cellular localization predictor ProtComp, expression analysis program Seltarget, RNAmap and Oligomap programs for RNA/EST/oligo mapping to chromosome sequences, and the Genome Information Viewer.

"It will require heavy marketing and administrative expenses — the kind we so far tried to avoid," he said.

— JF

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