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Good morning! It's Thursday, November 2nd. Today’s post looks at Benchling, a SaaS company that’s streamlining lab work and generating $280M a year!

THE FEATURE

Benchling– The $6B SaaS Company for Researchers

Until very recently, researchers from biotech industries to academia relied on paper and spreadsheets to record, share, and analyze voluminous amounts of data. As a result, researchers, on average, spent 41% of their time on administrative tasks!

This all changed with the popularization of Benchling, a company selling research and development software valued at $6B last year!

So, What’s the Business?

Benchling founder Sajith Wickramasekara studied computer science at MIT, but his budding passion for biology had him spending much of his free time in research labs. 

While he loved participating in research, he felt frustrated and astounded by the archaic methods used in labs. Compared to his work in computer science, Sajith felt like biology researchers were operating like cavemen. 

It was in this frustration that Sajith saw an opportunity. In 2012, he dropped out of MIT to develop software that could streamline biology lab work. For the first few years, Sajith was rejected countless times by investors who believed there wasn’t a sizable enough market for his business to service. 

However, Sajith knew that the industry was developing and focused on the projected growth rather than the current addressable market. By moving fast, he could corner the market on software services for lab work before there was a demand for it– akin to the strategy behind companies like Amazon and Shopify. 

His growth predictions for the bioinformatics market were spot on. The industry grew to $8B in 2019 and is expected to reach $24B by 2027. 

Today, Benchling is used by over 200K scientists at 900+ companies and 7,500 research institutions worldwide. In the last five years, the company has grown ~400%!

Benchling operates on a freemium model, allowing users to learn the platform and use its basic tools with options to pay for additional and more advanced software, such as 3D modeling for chemical compounds. In 2022, Benchling’s premium subscribers brought in $280M in revenue for the company. Subscription fees can range from $15K/year for small biotech labs to millions for large corporations. 

The Innovation: Freemium for the Win

Despite a lack of consumer demand and venture capitalist investments, Sajith laid the seeds for dominating the research market early on through his freemium model. To gain early traction, Sajith simply gave Benchling software away for free to academics.

Essentially, Sajith sacrificed generating revenue for a potentially lucrative long-term investment. By offering free software to academics (who aren’t known to be wealthy), Sajith created a moat around early adopters that competitors couldn’t infiltrate.

In addition to gaining loyalty from academia, giving away software for free resulted in corporate adoption. Research students who trained themselves on Benchling would go on to commercial jobs where they would then convert entire companies into using the research platform.

Though Benchling doesn’t give its software away for completely free anymore, it still uses its freemium model to great effect.

In addition to converting sales, the freemium model maximizes the number of researchers using the platform. With more users, Sajith has more data points to analyze on how he can improve existing software tools and develop new products.

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