Many in the entrepreneurial biosciences community often lament about the inadequate availability of venture capital and other investment funding in Michigan to grow pre-seed and seed stage companies. Business leaders remain unconvinced that Michigan will become competitive in the life sciences, but they point to start-up funds for life sciences entrepreneurs as the most effective strategy for making Michigan a major player in that sector.
The state, and for that matter the Midwest region, still suffers relative insignificance in the venture capital world ($105.4 million invested in Michigan vs $29.4 billion nationally in 2007) despite recent efforts by the state to establish a number of fund-to-funds, along with an increase in the number of venture capital firms and the size of their capital funding. While this bodes well for growing technology sectors like life sciences, it still means that start-up companies must look towards the east and west coasts primarily when searching for funding.
We can point to numerous examples where newly minted companies, born from intellectual property developed at a Michigan academic institution, have had to move to the coasts and follow the money trail. What’s it going to take to insure that home-grown biotech firms can stay in the state, have access to adequate capital investment and relevant resources, and thus insure their long-term commercialization viability?
In a word – success! Success breeds more success. Investors will flock to where there are winners. So more investment capital in Michigan will only occur on the heels of visible wins like Neogen, Esperion Therapeutics, QuatRx Pharmaceuticals, Asterand, and others. As they build successes, it will create the kind of maturity that will provide the capital influx necessary to sustain other start-ups and get the larger businesses to stay and create more jobs themselves.
The availability of venture capital in Michigan is a necessary component if the state and Midwest region are to become a biotechnology powerhouse. However, it’s a catch-22 situation isn’t it? One can’t get the capital without a nucleus of success, but the industry growth can’t occur without sufficient investment – will we succeed.
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