Seattle Needs an “Incubator” Culture
If Seattle is to occupy a future place of dominance in the biotech world, it must foster more of an “incubator” culture. There is a “valley of death” between the well-funded labs of academia and private venture funding that is difficult to cross.
The National Institutes of Health funds non-profit institutions like universities for fundamental research. Whereas private venture dollars migrate towards technology that has already been proven to a level far beyond what is common in a university lab. So how does one raise capital to take technology from the lab to a venture fundable stage?
Attempting to bridge the chasm are things like federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants but they realistically take 12+ months to get, require an institutional affiliation, and “virtual companies” are ineligible—what madness! The reason my company would apply for such a grant is because we are a “virtual company” and need pay for early data generation (read: lab space and reagents). Even if I was willing to stomach the bureaucracy, and wait more than a year for a modest chance at getting the grant (which I’m not), we’d be ineligible anyway.
Washington’s own Life Sciences Discovery Fund (LSDF) seems to have recognized this problem and offers “commercialization grants” of up to $150,000. However, they only offer the grants to non-profits (last year 100 percent of them went to the University of Washington). I’ve been told that it is unconstitutional for the LSDF to give money to companies (our state prohibits direct investment into companies). It seems counterproductive as a strategy however, given that non-profits don’t commercialize things—companies do. It’s the entrepreneurs that take ideas from labs and build companies around them and unfortunately they are a group the state is explicitly not helping.
Seattle has a great angel investor scene, but few angels in the main networks feel qualified to be investing in early stage life science companies.
The only organization in Seattle that I’m aware of that addresses this need is the venture backed Accelerator Corporation. They provide funding, lab space, and business support for early stage startups. However, on average, they take on two to three companies a year—hardly enough to support the future of Seattle’s biotech empire by itself.
In our case we’ve had to turn to San Francisco for many of our early stage needs and may have to move our operations there entirely. The Bay Area offers an aspiring biotech entrepreneur an ecosystem similar to the one Seattle has for software. We were able to quickly find an incubator lab packed with other biotech startups but willing to let us come in at night from 7 pm to 7 am for about $1,000 a month. The lab offers access to the core facilities at UC San Francisco as well as discounted rates on reagents and contacts to large commercial suppliers. This kind of fertile, environment is essential to a thriving entrepreneurial sector and sadly its largely lacking in Seattle.
If Seattle is serious about being a biotech player we must invest in our entrepreneurial community. We should have incubators that are publicly or privately funded that can provide entrepreneurs with six months or a year of lab space for dirt-cheap and guidance to connect them with the existing biotech community. Tomorrow’s giant companies are built in garages today but unlike software, the Centers for Disease Control & Prevention has something to say about experimenting with cell culture and infectious diseases in your garage with a bag of Ranch Doritos and a Diet Coke. Such an incubator could be private or publically funded, but I think a partnership between the two would be ideal. Subsidized access to tools and exposure to potential investors for a small fee and equity stake in the company would be a great deal for entrepreneurs and Seattle.
Creating a culture conducive for life sciences entrepreneurship requires different ingredients than are required for software. The valley of death is still crossed by entrepreneurs in Seattle every year but the region could benefit greatly by improving the environment for early stage biotech entrepreneurs. Happily, Seattle already has great research and state of the art facilities. It is high time we use them to help the entrepreneurs who are building our future.