Here's the lab space under construction at the Virginia Tech Corporate Research Center. Photo by Dwayne Yancey.
Here's the lab space under construction at the Virginia Tech Corporate Research Center. Photo by Dwayne Yancey.

The founders of Fermi Energy have an idea which, if it pans out, could revolutionize the auto industry.

That industry is already seeing the rise of electric vehicles, but electric vehicles are hampered by one thing: Their batteries require nickel and cobalt, two elements that must be imported. Fermi founders Feng Lin and Zhengrui Xu believe they can use other elements (they won’t say which ones for proprietary reasons) to achieve the same energy output, reduce the charging time – and cut costs by 20%.

First, though, they must be concerned about their own costs. It costs $100,000 to buy the lab equipment they need. “This is extremely hard for a young startup like ours,” Xu said.

This isn’t unusual. The biggest obstacle for many startups has always been the cost of getting started, says Brett Malone, president and CEO of the Virginia Tech Corporate Research Center. And for those companies that involve some kind of scientific aspect, “one of the barriers we consistently have seen is getting into labs,” Malone said. “You can’t do what you do over Zoom or in your kitchen if you’re a biotech company.” And not just biotech companies. Here’s an energy company that also needs lab space.

This lack of lab space poses a special challenge for the Roanoke and New River valleys, two increasingly connected communities that are trying to grow both a life sciences sector and a “deep tech” sector that involves engineering components, be it in energy storage or robotics or something else.

Many of our discussions about economic development have focused on site development – how if Virginia wants to attract more manufacturing we need more ready-to-go sites. All that’s still true. Here’s a less obvious bottleneck to economic growth, at least for certain communities. And that’s why construction workers are now busy building that lab space in Blacksburg, and soon will be in Roanoke.

At the Corporate Research Center, some 2,500 square feet of space is now being remodeled, enough for 18 lab benches, which is the way such things get measured. (Total cost: more than $1.2 million – $599,000 from the state’s GO Virginia economic development program, $125,000 from Montgomery County, $125,000 from Roanoke with the remainder as a match from the CRC).

Meanwhile in Roanoke, work will start soon (we’re not sure when) on an even bigger lab space project – 30,000 square feet in a building on Jefferson Street that’s owned by Carilion Clinic. For that project, the state appropriated $15.7 million in the budget that Gov. Glenn Youngkin signed this past summer. Roanoke has kicked in another $1.9 million from the American Rescue Plan Act, the COVID-relief package Congress passed in 2021. (Disclosure: Carilion is one of our donors but donors have no say in news decisions; see our policy. You can be a donor and have no say, too.) 

There are several points to be made here. First, these are two separate projects, with separate funding streams. However, these are also related projects – the Roanoke and New River valleys are together trying to build different ends of the same regional startup sector. For those of us old enough to remember when the two valleys regarded themselves as rivals, this is a signal moment. Here’s yet more evidence that they now regard each other as collaborators.

Here’s why this matters: Lab space is the equivalent of co-working space for some startups. When Malone arrived at the Corporate Research Center, existing lab space was completely booked – and there was a waiting list. Lab space everywhere is pretty well booked. In April, John Newby, the CEO of the Virginia Biotechnology Association, told a meeting of business leaders in Roanoke that 98% of all lab space in the “biotech corridor” in neighboring Maryland is already taken.  “That’s an opportunity for Virginia,” he said. In other words, the “Field of Dreams” principle seems to apply. If you build it, they will come. “We can attract a lot of companies by investing a modest amount of money in lab space,” he said. That was back before we even had a state budget. Now we have one, and money for the lab project in Roanoke is committed – and the separate money for the lab project in Blacksburg is already being spent.

Last week the CRC offered a preview tour of the space to companies and invited Cardinal News along for a look-see.

The best way to think of this lab space is to think of it as co-working space. Some companies may not need permanent lab space, they just need periodic access. “As a small company, I may need to do this once or twice a month,” Spencer Leamy, chief research officer for Corvus Labs, told the group. “I can’t afford to rent a whole space.” And he certainly can’t afford to build a whole lab, which is what might otherwise be required. Sometime in early 2023, he’ll be able to simply “rent a bench.”

From a business ecosystem point of view, that’s the goal, Malone said – “to grow companies and keep ’em here.” Maybe they start out renting a single bench, then expand to more, then maybe move out to their own space as the company prospers.

With big industrial sites, we hear companies talk about “speed to market” – they don’t want to spend a lot of time on site preparation. That’s one of the reasons the Southern Virginia Mega Site in Pittsylvania County lost out to Georgia for an 8,100-job Hyundai electric vehicle plant back in May; the Georgia site was better prepared with grading and utilities and such. That’s also something that Virginia is working to improve. The current state budget includes more money for site preparation and Youngkin is pushing the state to move even faster.

The same “speed to market” issue is involved with lab space, too. With coworking lab space available, “we could get a company started within weeks and start collecting data,” Malone said. “If you’re messing around for three months [trying to find lab space], you’re burning time if you’re on a six-month SBIR [Small Business Innovation Research] grant.” By being able to point to the lab space, that improves the chances that startups may be able to win key funding to get started. “The win rate for a grant goes up,” he said.

I’ve used the term “lab” generically here. Not all labs are the same, though. There are “wet labs” that involve water and “dry labs” that don’t. And by water, we don’t necessarily mean tap water. We’re talking about access to deionized water, which doesn’t exactly come out of the faucet. We’re also talking about freezer space that can chill certain samples to -80 degrees Fahrenheit. These Blacksburg labs also advertise a lot of equipment that you may not have found in your high school chemistry lab: solid phase peptide synthesizer, autoclave, CO2 cell culture incubator, spectrophotometer, EVOS fl AMG inverted imaging digital microscope, Waters 245 HPLC with various columns. No, I have no idea what most of that is.

The collection of tech companies who were on the tour illustrated the diversity of the companies that might need lab space. Not all are boiling-beakers kinds of companies. Some may need access to all those gizmos above. Others might need access to an amped-up power supply or a safe place to use, say, soldering equipment. Corvus Labs is a software company that specializes in “building advanced intelligence and machine learning applications.” Fermi Energy is a team of battery scientists. And then there’s Quentoros, a more conventional biotech company – if anything about biotech can be called conventional. It’s developing a biologic therapeutic to treat infections and inflammations. For now, it’s working on horses, using horse platelets, with an eye toward moving toward human treatments. The company’s Jessica Gilbertie said her firm would use the labs to “scale up bio-separation and manufacturing so we can get FDA approval.” 

Another example of how that Roanoke Valley-New River Valley collaboration works: All the Blacksburg-based companies mentioned above either are or have been part of RAMP, the Roanoke-based regional accelerator that aims to help jumpstart the growth of companies. Meanwhile, Quentoros is the first local company accepted into Johnson & Johnson Innovation’s JLABS initiative announced last December that’s intended to help grow the life sciences sector by partnering promising local startups with a company with international reach. “We’re trying to build that pipeline,” Malone said. 

This is a glimpse into the economy that’s starting to take shape around us.

Dwayne Yancey

Yancey is editor of Cardinal News. His opinions are his own. You can reach him at dwayne@cardinalnews.org.