Delaware assembles high-tech economy, one startup at a time

Delaware’s aspirations for its high-tech economy are crystallized in people like Yushan Yan. He’s an entrepreneur and University of Delaware professor who is trying to solve a problem with hydrogen fuel cells.

Yan and his seven-member team aren’t tweaking the effectiveness of the cells. They’re tackling something far more important: their price. The current generation of cells is too expensive to compete with gasoline engines. Yan’s company, W7 Energy, is working on a new way to make these cells that could make them economically competitive.

Though the effort only has seven employees, it nonetheless embodies the state’s strategy to combine academic, public and private money to fuel tech innovation. W7 Energy has received funding from private foundations, the state of Delaware, the University of Delaware and the federal government, which approved an additional $3.4 million in early September.

The company is located in the Delaware Innovation Space, a nonprofit that provides services and 100,000 square feet of lab space to science-based startups and established companies. The innovation space recently held a ribbon-cutting to celebrate the completion of a $6 million capital project that renovated its first floor and added seven small lab spaces.

Although it was the politicians and other leaders who held the oversized scissors, the event also made room for entrepreneurs like Yan.

Alexa Dembek, chief technology and sustainability officer for DuPont, said she wasn’t celebrating the place as much as the people.

“Their courage, bravery, boldness … that’s what’s going to drive economic development and provide a solution to the big problems,” she said.

As Delaware’s political and academic luminaries took turns lauding the collaborative spirit behind the Delaware Innovation Space, a darker day seemed to loom large in their imaginations.

‘The world has changed’

On Dec. 29, 2015, DuPont laid off 1,700 employees, more than a quarter of the workforce in its home state. Coming after years of corporate layoffs, especially in car manufacturers, the lesson was impossible to ignore: The large companies that had built Delaware might not be able to sustain it for much longer.

“The world has changed,” U.S. Sen. Tom Carper said at the ribbon-cutting. “We have to be nimble to change as well. This building is the face of that change.”

That change is stamped by the past. The innovation space occupies two buildings in the DuPont Experimental Station, donated by the company in 2017. Some of the laid-off DuPont workers found a new home at the innovation space, which owns building 500 at the Experimental Station and leases a nearby building.

They include Chris Junk, a chemist who became one of the founding members of the Science, Technology and Research Institute of Delaware, or STRIDE, a consultancy that was one of the innovation space’s first tenants. Junk says being unexpectedly thrust back out into the job market turned him and his cohort into unlikely entrepreneurs.

The innovation space houses nine early-stage companies and three anchor tenants that employ 235 people with an average salary of more than $100,000. Each partner — DuPont, the University of Delaware and the state of Delaware — gets something different out of the collaboration.

Kris Vaddi of Prelude Theraputics

Charles Riordan, vice president for research, scholarship and innovation at UD, said during a panel discussion that the innovation space helps the university offer hands-on research options to students and recruit faculty who want to commercialize their work.

Still, the innovation space starts at a disadvantage compared with competitors in Boston and Silicon Valley. Kris Vaddi, a research scientist and former vice president of a successful pharmaceutical company called Incyte, said investors sometimes aren’t keen on his choice of headquarters.

“They try to convince me to move to Boston,” he said on a panel. But Delaware has the elements of successful biotech companies, he added. “Thankfully, we have Incyte as a model.”

Vaddi and other entrepreneurs agreed that finding affordable lab space is an important factor in deciding where to locate. The capital project aims to help even the smallest ventures find their place.

Pod labs to be first stop

The $6 million capital project included the creation of seven 150-square-foot labs. Each pod, which costs $2,500 a month to rent, has a vent hood, counter space and piped-in gases.

“Don’t underestimate the might of 150 square feet of space,” said Yan, the W7 Energy founder. 

The pods are meant as a starting point, not a long-term home, says William D. Provine, founder and president of Delaware Innovation Space.

“We let them begin here, then … support companies until they can live on their own,” he says, making an analogy with raising a child and ushering them out of the nest. 

Much of the pods’ value comes not from the 10-by-15-foot lab space, but the shared access to expensive machines, such as a mass spectrometer, which can reveal a substance’s atomic composition.

Even if none of these pods’ tenants becomes the next DuPont, they can still build up the state’s biotech economy, bit by bit.

In its heyday, DuPont scientists created new products from start to finish. Today, though, Dembek said, the company has adapted to incorporate more advancements from outside.

As chief technology officer, Dembek led DuPont to stop using the phrase “not invented here,” which reflected an attitude that external technologies weren’t as worthwhile.

Today, they’re more likely to consider working with startups like those at the innovation space. In biotech, bringing a product to market takes an incredible investment of money and time. 

Small companies at the innovation space can often find eager partners in larger corporations. Success, then, is more often about finding the right partner than about finding the right product. Seeing other companies as potential collaborators rather than competitors can be a foreign concept to entrepreneurs, many of whom assume they’ll be creating their own product from scratch.

For his part, Yan sounded grateful to have been given these opportunities. It’s not clear whether W7 Energy will scale up its production of membranes or license the technology to someone else, said its chief operating officer, Santiago Rojas-Carbonell.

During a panel talk, Yan acknowledged that even if his company doesn’t make it, he takes pride in the experience it has given to his grad students. At that, Rojas-Carbonell and others in the company turned to each other and smiled.

“I never thought 15 years ago that I’d be starting a company,” Yan said. “For me it’s been a dream come true to start here. I couldn’t imagine a better place to start.” 

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