Intelligent Machines

Shrinking the Lab

Labcyte makes lab equipment that dispenses liquids in nanoliters, which can save time and money.

Jul 27, 2005

Company: Labcyte (formerly Picoliter)

HQ: Sunnyvale, CA

Founded: 2003

Management: CEO Elaine Heron was previously general manager of the molecular biology division of Applied Biosystems (NYSE: ABI). She has also been vice president of marketing for gene research firm Affymetrix and a founder of Molecular Dynamics, now a division of GE Healthcare. Founder and CTO Richard Ellison previously worked in new printing technologies at the Xerox Palo Alto Research Center (PARC).

Investors: In July 2005, the company closed Series C financing totaling $21 million, led by Cross Atlantic Partners, Hambrecht & Quist Capital Management, and the Bay Area Equity Fund, with participation from existing investors Abingworth Management, Alloy Ventures, Delphi Ventures, and the Sprout Group.

Business Model: To keep down their costs during the drug discovery process, companies and universities are turning to miniaturization processes. But there’s a catch: standard lab equipment was not designed for dispensing tiny traces of substances. Labcyte has developed a proprietary technology for using focused acoustics, or ultrasound, to precisely transfer droplets down to 2.5 nanoliters. By transferring compounds directly into assay plates, the technology eliminates the need for tips, washing, and intermediate dilutions. Their system retails for around $225,000.

According to the company, six major pharmaceutical companies have purchased its systems, including GlaxoSmithKline and Astro Zeneca, as well as schools, including Vanderbilt University. Clients report improved results in the form of time savings, according to the company, which leads to a return on investment in the new equipment within about a year. Labcyte also expects to deploy its acoustic technologies for nano-dispensing liquids in the fields of genomics and proteomics.

Competitors: Genomic Solutions, Gilson, Agilent, Tecan, Thermo Electron

Dirt: Labcyte is making the lab “cool” again – at least for investors. Twenty-one million dollars is a big round for a lab equipment company. Clearly, Labcyte’s backers believe that the company has the goods to go head-to-head with its larger competitors. While other companies have nano-liquid dispensers, Labcyte appears to be unique in its use of ultrasound, which allows it to work with smaller traces of liquid. Another plus: Labcyte’s products would probably help to round out the offerings of larger competitors – making it a potential acquisition candidate.

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Calling All Computers
Newcomer PhoneGnome is joining Vonage and Skype in the wide-open voice-over-Internet market  – and other alarm:clock news from the land of private venture funding.

Loyal readers of our blog, alarm:clock, know that we have little sympathy for the traditional telephone companies. Quaintly known as Regional Bell Operating Companies (RBOCs), they’ve been fumbling around with Internet opportunities for years now, particularly as they try to preserve their dwindling core business: offering telephone service over copper wires. Because of this defensive position, we believe RBOCs stifle innovation and have yet to react adequately to the impact the Internet is having on basic telephone services, such as in voice-over-Internet Protocol (VOIP).

The emergence of Vonage, a well-marketed VOIP service, whose basic fee is only $15 a month, has added to the pressure on RBOCs, as has the runaway success of Skype, the free Internet service that turns a PC into a phone. If one doubts that basic phone service is becoming a free commodity, consider that Skype has been downloaded at no charge by more than 140 million people worldwide; from Boston to Bangalore, phone calls can now be free.

And now Skype isn’t the only such game in town. Just last week, Danville, CA-based TelEvolution launched the latest entrant into the low-cost communications market – and we suspect it’s making the RBOCs squirm again. The company sells a VOIP device called PhoneGnome, a small box that costs $120 – with no monthly services or charges.

Aside from its low price, a key selling point of PhoneGnome is its simple installation; instead of switching to a new service and getting a new phone number or transferring an existing number, PhoneGnome automatically configures itself once attached to a phone line and broadband connection. Vonage requires the installation of new modem (admittedly, not exactly rocket science).

PhoneGnome users can keep their existing phone numbers, and calls to other PhoneGnome users are free. Calls to non-PhoneGnome users revert to the existing land-line service. The equipment also has VOIP features such as email notification of voice mails and online call logs.

However, the fact that PhoneGnome calls are free only if placed to other PhoneGnome users could limit TelEvolution’s growth. Skype, which also requires that two callers both use Skype software, has benefited from making its software application is instantly downloaded and installed. (Skype users can even send email invitations to one another to join.)

Without a massive, spontaneous adoption of its box, TelEvolution will need to consider a sizable marketing campaign. Indeed, although PhoneGnome may offer significant ease-of-use advantages over the likes of Vonage, the VOIP market is being won on marketing. Vonage has raised a staggering $408 million and its promotions are ubiquitous on the Web and TV.

On this front, TelEvolution does have a management team with impressive experience. David Beckemeyer, the company’s founder and CEO, was a cofounder of Earthlink, as well as its vice president of Engineering and CTO. Back then, Earthlink was a little-known ISP trying to grab some scraps from another company with enormous marketing resources and market share – AOL. No doubt, Beckemeyer will put his previous experience to good use in trying to establish PhoneGnome as a major player in this emerging market.