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Biotech Hubs Are Firm’s Stepping Stones to Success

BIOSURPLUS

CEO: Preston ‘Cinco’ Plumb.

Revenue: In the past six years, the company has grown its revenue fivefold to approaching $10 million.

No. of local employees: 25.

Investor: KI Investment Holdings.

Headquarters: Sorrento Valley.

Year founded: 2002. (Plumb purchased the company in 2005.)

Company description: BioSurplus’ team of scientific experts has pioneered solutions for every stage of the lab equipment lifecycle. The company is dedicated to maximizing the value and use of laboratory equipment for its customers by providing a website of dynamic inventory as well as holding live and online auctions. It is also developing software solutions that allow clients to manage their own equipment.

Key factors for success: Since purchasing the business in 2005, Plumb has invested in software, infrastructure, service and repair and has assembled a team with deep scientific knowledge. The challenge is to help companies maximize their laboratory assets while providing high-quality instruments to the people who need them at a more affordable price than new purchases.

BioSurplus is ambitiously making its way into major biotech hubs one metropolitan area at a time.

Having expanded to the San Francisco Bay Area in 2009 and South Korea last year, the San Diego-based buyer and seller of used lab equipment is now setting its sights on opening a warehouse and showroom in the Boston area by this summer.

BioSurplus President and CEO Preston “Cinco” Plumb said the new outlet will position the company to better serve its East Coast clientele while logistically allocating its inventory across the nation so there’s a good cross-section of equipment strategically located in the Bay Area, Boston and San Diego.

“Boston is one of the largest and fastest-growing life sciences markets in the country and the world,” said Plumb, who acquired the company in 2005. “We’re excited about bringing our service offerings and value propositions to the Boston market.”

Growth Pattern

In addition to selling the used lab equipment at store locations and online at biosurplus.com, BioSurplus’ business model includes auctioning lab equipment and providing service and repair of the equipment. Plumb said the company has grown fivefold in the past six years and is approaching $10 million in revenue. Along with a strong management team, he says he attributes the growth to the staff’s scientific and industry knowledge, and to the company’s industry leading software and systems that enable them to manage a complex array of equipment inventory and transactions.

“We have expansion plans to continue to ramp up our services and areas of our business, whether that be different geographies or traditional growth in core service areas,” Plumb said.

Jackie Townsend, BioSurplus chief marketing officer, said the company has narrowed its Boston search for a 10,000-square-foot site to several regions. The company is in the process of finding a location that would be as convenient as its Sorrento Valley operations, which is near the Interstate 805 and 5 interchange.

“We want the equivalent of this as far as proximity in Boston,” Townsend said. “We’re in the process of surveying scientists to see which one of the locations in Boston would be most convenient for them.”

Local Investor

The majority of the expansion will be funded by a $1.5 million capital raise from San Diego-based KI Investment Holdings LLC.

Stan Sewitch, a director and founding member of KI Investment Holdings who led the investment team that analyzed the BioSurplus investment, said the backing aligns with the company’s focus on longer term investment horizons of 10 years or more centered on good companies that provide middle class careers.

Bringing Innovation

The strategy has resulted in an internal rate of return of 28 percent annually since KI was founded in 2006, he said.

Factors that make BioSurplus attractive, Sewitch says, are its long-term business model, customer service excellence and strong discipline. He also praised BioSurplus’ ability to bring innovation to the industry with such things as its inventory management system.

“The team of people they have collected around that business model is incredible,” Sewitch said. “They bring a scientific approach of understanding the equipment that other companies don’t have.”

While BioSurplus has its eye on other potential areas of expansion, Sewitch said KI will focus on making sure that growth occurs correctly.

Staff Additions

With about 35 employees companywide, BioSurplus intends to hire 15 to 18 people to staff its Boston facility over the next year and a half, Townsend said. Two additional staff members are expected to be hired in the Bay Area and five more in San Diego this year. Local staff expansions range from business development to service and repair areas to support staff in operations and the warehouse.

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