[Updated with comments from NYCEDC] Over the past year, the New York City Economic Development Corp. has been trying to find a venture firm to help bankroll a big fund that would spur biotech innovation in the Big Apple. While that search is still ongoing, the agency has upped the ante and is now looking for additional partners to focus on other sectors of the local life sciences industry.
With the help of certain “industry R&D leaders,”—namely, Celgene, Eli Lilly, and GE Ventures—the NYCEDC is putting together what’s been dubbed the “early-stage life sciences fund non-therapeutics venture program.” The idea is to put between $40-$60 million into startups working on medical devices, diagnostics, digital health, genomics, and other life sciences products—not therapeutics. NYCEDC spokesman Ian Fried says that additional partners to the fund may be announced in the future.
The NYCEDC and its industry helpers will put up $20-$30 million of the funds towards medtech and other startups, and they are looking for a VC firm to pick up the rest. Proposals are due by Aug. 28.
[Updated with NYCEDC comments] The fund marks the second part of an effort by the NYCEDC to draw in a venture firm to prop up local life sciences startups. Back in December, the agency announced that it had joined with Celgene, Eli Lilly, and GE Ventures to put up half of a planned $100 million fund that would back 15 to 20 new local life sciences startups—therapeutics developers and others—by 2020. A VC partner was called on to pick up the rest. Fried says that the new disclosure isn’t of a separate fund, but rather the start of the second phase of the project. The NYCEDC separated the two parts of the project because each segment requires different types of investors with different strategies, he says.
At the time of the fund’s announcement, the NYCEDC said the startups it planned to back would pursue new therapeutics, as well as medical devices, diagnostics, and digital health technologies—and that eight VC firms were under consideration to be the partner of choice. The project appeared to have been pushed back. The NYCEDC’s site, for instance, said yesterday in one spot that the fund’s first investments were targeted for “early 2014,” and in another, “late 2014.” While no announcements have been made since December regarding the status of the fund, Fried contends there’s been no delay, and further, that there was just a typo on the site. It’s since been corrected to say “mid- to late 2014,” and Fried says that the process is ongoing, that the NYCEDC will pick its venture partner in the near future, and that the agency aims to make its first investments by the end of the year.
Venture investments in New York biotech are a sore spot for the area. As Rockefeller University president Marc Tessier-Lavigne said at an Xconomy biotech event earlier this year, New York brings in the second-highest total of NIH funding grants in the country, but the VC investment per NIH dollar is somewhere between “one-tenth to one-fifteenth” what it is in Boston or California. The NYCEDC’s fund is one of the local initiatives meant to help fix the problem, but there is a long way to go to fix that statistic—affordable lab space for biotech startups, for instance, has been and remains a massive problem.
Still, there has been momentum in the research community to bring New York biotech forward. The New York Genome Center came together as a collaborative effort between 12 of the area’s big research institutions last year. The Alexandria Center for Life Science is up and running on the East Side of Manhattan, though it’s populated so far with big pharmaceutical companies like ImClone Systems, Roche, and Pfizer—not startups. Harlem Biospace opened the first incubator in Manhattan, joining a second incubator at the Brooklyn Army Terminal, BioBAT. As the Wall Street Journal reported earlier this week, however, BioBAT has had a tough time getting going for a variety of reasons.