Originally published on PE Hub
By Matthew McCooe
Besides cities that make for a nice waterside vacation, these destinations seem to have figured out the complex, yet irresistible, world of bioscience investment.
For municipalities looking to stoke an innovation ecosystem, an anchor industry can provide the needed spark. One of the best anchor-industry bets around is biosciences.
Everyone needs healthcare, no matter where they live, and interest in genetics, life-saving drugs and high-tech medical devices is booming. It’s an alluring and growing industry promising lots of reliable jobs with good pay: In Connecticut the average salary for bioscience workers is over $85,000.
But only a few places seem to have figured out how to make it work. Here’s what any American city needs to do to become the next bioscience innovation hub:
Understand the opportunity
Before 2020, people age 65 and older will outnumber children under age 5. By 2050, the proportion of the population aged 65 and older will be more than double that of children under age 5, according to the U.S. Census Bureau.
The graying of the world’s population represents an expanding need for sophisticated healthcare and accelerated innovation in biosciences, one that goes beyond any single city or region.
Making sure people in Columbus, Ohio, have access to the same life-saving treatment and medical equipment that New York City’s residents do is really important, both for patient outcomes and local economies.
Bioscience companies have the opportunity to partner with regional hospitals to help them keep up with the pace of innovation and emerging technology as the world’s population demands more care.
The biosciences also hold the potential to transform current industrial strengths of local economies into full-blown healthcare hubs of innovation.
What if Scottsdale, Arizona, often named one of the best places to retire, began investing in age-related technology companies that partnered with local healthcare companies? Or in Utah, where skin-cancer rates are surprisingly the highest in the country, what if Provo combined its startup prowess with healthcare innovation in the dermatology sector?
Instead of healthcare demand becoming a drag on the economy, it can become an opportunity for investment and innovation — not to mention bringing the same caliber of care and patient outcomes that any other bioscience hub boasts.
Accept some risk
Anytime you place a bet, whether you’re playing poker in Las Vegas or buying a lottery ticket, you accept some level of risk. The same holds true for building a bioscience hub, although the stakes are usually higher.
In bioscience, however, that risk can be mitigated. Allowing government to play a significant role and act like a venture fund is a key factor to de-risk bioscience investment at the regional level.
Government-backed dollars marked for bioscience investment already flow into every state and have been used to spark private-sector innovation for many years now.
Having federally backed funds immediately makes for a safer bet, but we still see most of that money going to R&D at universities and eventually into already established biotech hubs.
Established biotech centers worldwide brought in more than $134 billion in revenue in 2016, and that market is only going to grow.
Regional centers are ripe with opportunity for bioscience investment, but government, hospitals and private investors will all need to come to the table to ensure that risks are being managed and dollars are being used to plant the right seeds, not just on flashy, expensive projects.
Find the right people
If you’re trying to build a bioscience hub outside established centers, in places like Topeka or Omaha, who’s going to come in to provide executive leadership?
New York has a big leg up on attracting the people who can become CEO of a biotech company and lead it through all the related obstacles, simply because it’s New York.
Betting on the biosciences requires drawing in stakeholders who have the contacts, experience and passion to develop a robust network of partners with a similar vision.
That’s no small task and it might seem impossible — but at one time Cleveland also seemed unlikely to become a major biosciences hub. In 2017, though, the city pulled in nearly $500 million in bioscience investment and it employs 100,000 in the field.
Nashville also seemed unlikely to be home to the most high-growth healthcare companies in the country, but it is.
The challenge is how to get people who are proven winners to be part of your ecosystem. Every community has someone who can fundraise, or who has the network that can be tapped into when a new company needs a C-level executive. The community must be built around a variety of stakeholders and skillsets, not a single individual or narrow approach.
Mentorship models, or something akin to an entrepreneur-in-residence program, are good places to start. Ultimately, it will likely be a combination of models that work depending on the region, making experimentation key.
Build an ecosystem
Winning in biosciences takes a supportive community that operates in an interconnected way.
The healthcare industry is massive, and the amount of tech and potential is massive, which makes navigating it all that much more difficult. Healthy, vibrant venture communities partnering with local government and hospitals can begin to bridge the gap.
Yes, it’s a gamble of sorts, but taking advantage of this industry to create an innovation hub that fuels economic transformation is a risk worth taking.
And for anyone who lives outside the current hot spots, it can’t happen fast enough.
Matthew McCooe is CEO of Connecticut Innovations, the state’s strategic venture arm. He can be reached at Matt.McCooe@ctinnovations.com and +1 860-563-5851.