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How To Build a Biotech Cluster That Isn’t Boston or SF

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and embrace co-opetition, not competition. And second, our metrics need to shift away from traditional economic development to economic impact; at least for some period of time.

I’ve latched on to the term “economic impact” because the University of Louisville can generate economic impact for itself and the community even if what creates the economic impact is not located in town.

Here’s one way how to create impact: Take the technology—perhaps in an LLC with some early proof of concept—to the right people. Start with your network of university alumni. But match the technology asset with the “management talent” investors will fund, wherever they are located. In Seattle? Fine. Remember, these are, or will be, to borrow a phrase from Atlas Venture’s Bruce Booth, classic Quadrant 1 biotech startups—“typically roll-up-your-sleeves venture creation around academic science or a whiteboard concept.” These companies require significant capital and come with a lot of risk. VCs don’t make these kind of investments for economic development purposes, such as creating jobs.

Again quoting Booth, “many Quad1’s sell early.” And this is a good thing. When the company sells, it creates economic impact back to the University (via equity ownership, royalties and/or gifts from alumni). After several economic impacts like that, I just might have a big enough bucket of cash to use to bring “management talent” to Louisville that can build a biotech startup in town that creates jobs. Once a few companies like that start to take root, then the first generation of “management talent” might mentor another team. Hopefully, over time, a Quadrant 1 company matures into a Quadrant 4. It requires a long-term view, à la Brad Feld. And it’s not focused on job creation. Short term, it’s about building awareness. Near term, it’s about economic impact. Long term, building the best biotech cluster your community can build.

If I were trying to emulate a city, it would probably be Seattle, because it is almost a self-contained example. Starting in the ’80s and ‘90s, Seattle has had quite a few companies grow there and then get acquired; Immunex, Rosetta Inpharmatics, Corixa, Icos, ZymoGenetics and more recently Calistoga Pharmaceuticals. Those acquisitions have no doubt created wealth in the community. It has created “buzz” for Seattle. From my vantage point, it has absolutely created a talent pool. Those people end up jumping in to other companies, either as angels, employees or board members. It creates a cycle. I see Dendreon and Seattle Genetics as the next step; homegrown companies that become biotech anchor tenants. Maybe Alder Biopharmaceuticals and VentiRx Pharmaceuticals will be similar examples.

So, how do you build a biotech cluster? One step at a time. It’s not going to happen overnight, but I’m sure we can do it in Louisville.

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  • Thomas Loarie

    A great book to complement Steen’s thoughts is “Closing America’s Job Gap,” http://tinyurl.com/covygst by Walshok, Munroe et al. One third of the book details San Diego’s successful collaboration that led to its emergence as an important life science and tech cluster.

    • Jimbo

      the problem is that san diego has now failed.

      And in relation to the article, seattle is failing to as companies move out of there or are bought by SF or boston companies.

      DC and Research triangles are still players, but it is really jsut SF and Boston.

      The authro also faield to mention the much greater access to entertainment, restaurants, skiing, and other lifestyle benefits to the coasts over lousiville