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biotech hubs are hubs for reasons.
Discussing factors correlated with success or failure in drug development in Does size matter in R&D productivity? If not, what does?, Michael Ringel of The Boston Consulting Group and colleagues noted, “There was also a significant correlation with success when the company has a major R&D facility present in a science hub—a factor that we believe improves scientific acumen by providing better access to internal talent and to networks for collaboration.”
“Recruiting talented senior management is strongly linked to the success of biotechnology companies,” stated a 2003 paper by Monica Higgins and Ranjay Gulati.
“University spin-offs that receive venture capital funding have a 20% to 26% higher likelihood of commercialization compared with spin-offs that do not,” according to a paper by Christopher Hayter.
As reported in The A-List: The Trend-Shaping Series A Financings Of 2013, the average size of a biopharma Series A was $18 million per company. How many of the 2012 university biotech startups outside the major hubs will get close to that Series A dollar figure? If they aren’t getting to that level, are they behind the curve? Is everyone competing for investment from Jonathan Behr and Phil Murray’s In search of dry powder list? Alternatively, can university biotech startups outside the major hubs make it with angels and/or other funding sources such as federal Small Business Innovation Research (SBIR) awards? Or are they just at too great of a disadvantage in raising money and recruiting people?
Are universities creating too many life science startups? Perhaps.
All of which, in my opinion, advocates for a version of Atlas Venture’s seed-led model at universities; de-risk, then scale your winners. But maybe—probably—consider scaling them in an appropriate hub where it can get the money and the people it needs to grow.
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