How to Scale Up a Business With Few or No Physical Assets
(Via ZEXPR) New business models that don’t require capital assets.
Starting a business or scaling up the small business you have is a dream of many people. One of the most common excuses is not having enough capital or physical assets to start a business.
There have always been many kinds of businesses that don’t require many physical assets or money. Also, the development and maturity of the internet and mobile devices to access information has enabled many new businesses that previously would have required buying expensive assets.
Business Ideas with Limited Capital
Consulting or skills-based businesses have always been available to those who do not have capital but have a skill or expertise that would be valuable to a customer. From the early days of the internet, content businesses (writing, art, photography, education, etc.) have proliferated due to the ease of distributing content online.
New Business Models Enabled by the Internet
There are many examples of successful business models that just a few years ago would have been prohibitive.
Consider Uber, Lyft, and others as examples. Uber has become one of the largest transportation companies in the world. In the pre-internet world, Uber would have had to spend billions to purchase fleets of automobiles and hire drivers to reach the scale that it has achieved today. Uber’s business model takes advantage of the excess capacity of personal vehicles and the excess time of individual drivers to establish a fleet of cars to provide transportation to customers. While Uber still needs to spend money to hire software engineers and other personnel, it does not spend money to hire drivers or purchase automobiles. If Uber had to make those expenditures, it would need several orders of magnitude more money to maintain its scale.
Another example is Airbnb. They offer hospitality services without owning any real estate or hotels. By using the excess capacity of personal dwellings, they have become one of the largest hospitality companies in the world. One could argue that Marriott or Hilton should have become or formed an Airbnb-like business, but those companies did not understand this new business model or how it would work. LikeUber, Airbnb has to hire personnel, but it does not have to spend the orders of magnitude more money that would be required to purchase the thousands of homes that it carries in its inventory.
New Business Model in the Biotechnology Industry
An industry where it’s virtually impossible to start a business without copious capital is biotechnology. The process of drug development requires many years of R&D in expensive and highly permitted labs with costly instrumentation. Also, expensive scientists, engineers, technicians, and physicians are necessary to perform the research. Furthermore, laboratory R&D followed by human clinical trials takes many years before products are approved for sale. Companies in this sector are constantly raising venture capital followed by money from the public capital markets to finance their operations.
One company executing a business model that bucks this trend is Nasdaq listed Anixa Biosciences (NASDAQ:ANIX). Just like Uber is a major transportation company that does not own automobiles, and Airbnb is a hospitality company that owns no hotels, Anixa is a biotechnology company that owns no laboratories. Besides its visionary CEO, Dr. Amit Kumar, who is a trained and highly-experienced scientist, Anixa does not employ scientists or physicians.
Like Uber and Airbnb, Anixa realized that many research universities have excess laboratory capacity and world-class researchers with whom it could partner to develop proprietary products. Anixa is currently a small company, but it has big ambitions to be bigger than Uber or Airbnb. Furthermore, it wants to develop products that can save lives and change healthcare. Anixa is working with the Cleveland Clinic and the Moffitt Cancer Center, two of the most lauded hospitals and medical research centers in the world, to develop revolutionary products for cancer and other diseases.
Anixa has many projects in progress, but one such project is a prophylactic breast cancer vaccine. The vision for this vaccine is to be able to give women a shot and eliminate breast cancer, the most common malignancy in women. Just like vaccines have helped mankind eliminate infectious diseases like small-pox, and polio, Anixa, and partner Cleveland Clinic feel they may be able to eliminate breast cancer. The vaccine has been tested in animals with spectacular results, and recently the FDA gave Anixa and the Cleveland Clinic the permission to begin testing the vaccine in humans. The human trials are expected to commence in June or July of 2021.
The science behind this vaccine is beyond the scope of this article, but there is a lot of information on the Anixa website, and Dr. Kumar is happy to tell people how this vaccine works. The key point is that Anixa is developing the vaccine with very little capital expenditure. Initially, this technology was invented and developed over a decade of R&D at the Cleveland Clinic by a team led by visionary immunologist Dr. Vincent Tuohy. Much of this R&D was funded by government grants. Now the technology has been licensed by Anixa, and the R&D and human trials are being conducted at the Cleveland Clinic with additional funding from government grants. Through this partnership, Anixa gets to work with a world-class organization with world-class scientists and physicians while spending a fraction of what it ordinarily would spend if it were executing the conventional biotechnology business model.
Furthermore, once Anixa has demonstrated the human efficacy of the vaccine, it will partner with a large pharma company to manufacture the vaccine in an existing manufacturing site and market, sell and distribute the product using the existing infrastructure of the pharma partner. In this manner, Anixa does not have to expend capital to build a manufacturing plant and hire thousands of salespeople. Why reinvent the wheel? All of this infrastructure exists and has excess capacity.
This is a revolutionary business model, and time will tell if it will be successful. We are all rooting for success not only for the revolutionary business model but also for the revolutionary products which can potentially save many lives and save billions of dollars in healthcare costs.
