Eight Ingredients to Build a Life Sciences Hub
COURTESY OF JEREMY FRECHETTE
1) A Rainmaker: When Kalamazoo was in danger of losing its top scientific talent in 2003, Bill Johnston (pictured at left) and the other board members of Southwest Michigan First had the foresight and, just as importantly, the money to do something about it. Johnston estimates that since 1999, his economic development group has poured $62 million, most of it private capital, into attracting business to Kalamazoo. Lacking this, a region can also look to major corporations to fill this role. The Philadelphia metropolitan area, for example, has benefited from the money Merck & Co. has spent to build infrastructure there.
2) Venture Capital Money: In a world where every region wants to be part of the Next Big Thing, money talks. "Cash is king for these small startup companies," says Ron Kitchens, executive director of Southwest Michigan First, which formed in 1999 and plans to begin dispersing $50 million in venture capital money in the first quarter of this year. Kitchens hopes this money will help attract startups to Kalamazoo. But it will take more than just that, says Ted Abernathy, vice president of the Research Triangle Regional Partnership, an economic development group in North Carolina. "It takes all types of money," he says. "We refer to it as sophisticated capital here." This includes angel money (long-term investors) and mezzanine money (comes in during later phases of development).
3) Local Talent: Nothing can replace human capital. Once it leaves, it's not likely to come back. Cities and regions looking to become life science centers need to hold on to these people and give them a reason to stay. Their presence often leads to business growth. Take Chicago, for example. Dave Miller, president of the Illinois Biotechnology Industry Association, says the presence of Abbott Laboratories in the Chicago area led directly to the creation of successful startups such as Hospira and Valent BioSciences. "Clearly," Miller says, "having big companies in your neighborhood helps launch smaller companies."
4) "Coolness": Decades ago, companies looking to relocate wanted to know how close they would be to the nearest rail lines. Today, when trying to build clusters in a new knowledge-based economy, startups and other companies looking for a home want to know: Can we attract good people here? In this economy, it's good to be "cool." Examples of cool include a high quality-of-life rating, accessibility to outdoor recreation, or a thriving arts scene.
5) Government Support: In order for any city or region to attract top life science companies, government needs to get involved. In Kalamazoo, local leaders have seen that. In the last five years, the state of Michigan has earmarked more than $220 million to help cultivate the life science industry there, according to Jeff Mason of the Michigan Economic Development Corporation. This, says Mason, has helped build some 2,000 life science-oriented companies.
6) Attention: All the money in the world may not help, however, unless the region in question gets attention - a reality underlined by regions that hire marketing firms to help them tell their stories. Andy Levine, president of Development Counsellors International, says the Research Triangle Park is a place that has benefited from such attention in the last thirty years. "If there is a perception that a cluster is developing and growing and building in a particular region of a particular city, I think that helps to attract other people," says Levine.
7) Major Academic Institutions: It helps to have a support network already in place, including everything from universities to medical schools to major hospitals. Boston, Chicago, and San Francisco have all grown their life science and biotech industries with the help of nearby universities. "We tell people that the universities start everything," says Abernathy, whose area includes Duke University, North Carolina State, and University of North Carolina.
8) Other Biotech Companies: While there isn't a specific threshold, more companies in the area mean employees have more job choices and employers have a greater pool of talent to draw from. Abernathy, for example, knows that top talent wouldn't leave San Francisco for Durham, NC, if they thought they might get stranded there if their startup fails, or gets bought out, somewhere down the line.