In 1997, reconstructive surgeon Peter Johnson, MD, the founder and president of the Pittsburgh Tissue Engineering Initiative, saw an opportunity in TissueInformatics Inc. to support the tissue engineering industry with informatics tools that enabled the analysis and digital cataloguing of tissue images and data. But it appears that the usefulness of TissueInformatics' platform extends beyond tissue engineering--the company has come along at just the right time to also serve a growing need for digital tissue analysis tools by biorepositories as well as by pharmaceutical companies using tissue samples to validate genomics discovery efforts.

With so much genomics data and putative drug targets to sift through, drug developers cannot risk making research resource allocation decisions before correlating gene and protein function with a disease process. The need has spawned a new generation of post-genomics companies focused on developing tools for validating drug targets, including smart screening methodologies and cell-based assays, and on ways to better organize and characterize genomics and proteomics data.

Selling research software is a tough way to generate big returns: there are dozens of competitors, most markets are small, and technology changes fast. Some companies are trying to create one-stop shopping solutions for large clients, building consulting and training businesses onto software sales in order to leverage up per-client fees. Others are creating one-stop-shops of a more democratic kind by exploiting the Web. Instead of selling to bioinformaticians, they're aggregating often easy-to-use versions of bioinformatics software and selling affordable subscriptions. But their real revenue generation model may be context-sensitive e-procurement: pointing out to customers which reagents to buy and then taking a percentage of the selling price.

Dismal conditions in the public capital markets can't help but affect biotech start-ups too. Venture capitalists are reassessing operating and exit strategies, and contemplating new business models.