Washington state gets more than $1 billion every year from the federal government to support biomedical research, which makes a lot of entrepreneurs wonder why there aren’t more startups being spun out each year. Now a couple of well-known Northwest life sciences entrepreneurs, Tom Ranken and Bob Wilcox, want to take a little more money from Uncle Sam and put it to work advancing that research a little further, by building biotech and medical device companies.
This concept, called Bionager (pronounced BI-on-uh-jer), is still very much at a fledgling stage. Ranken and Wilcox are seeking ways to get the federal government to pump in $10 million to get it off the ground. The goal will be to help finance promising research with commercial potential through the so-called “Valley of Death” where ideas die, because they lack enough proof to win venture capital support to shepherd them through the perilous phases of product development.
The vision is for Bionager to be a for-profit corporation that pools money from the federal government and private investors, who will take equity stakes in startup companies. Unlike many ill-fated incubators run by government economic development groups that seek to create jobs, or real estate developers who seek to fill up lab space, Bionager will seek to generate investment returns, Ranken says. It hopes to make seed investments of $100,000 to $300,000 to each company, and to cut off funding fast if the work doesn’t hit pre-established milestones set by a board with commercial expertise, he says. Once Bionager “separates the wheat from the chaff,” then the startups will be ready to capture the next round of private investment they might otherwise never get.
“This will be a little bit of capital to get you started,” says Wilcox, a former vice president of product development at Bothell, WA-based Ekos, an ultrasound technology company. But as Ranken adds, this isn’t supposed to be some doe-eyed, well-meaning, yet ineffective effort. Bionager intends to offer expert contacts to help get companies going, a firm set of business milestones, and a tight schedule to achieve them. “We’re going to be ruthless,” Ranken says.
Ranken’s past jobs have included stints as president of the Washington Biotechnology and Biomedical Association, and founding CEO of Seattle-based computational biology company VizX Labs. He has complained loudly for years about the “funding gap” he sees as a roadblock to sparking more innovation in the Northwest.
To do something constructive about it, he and Wilcox have sought to establish a five-member board of directors, which includes themselves; WBBA president Chris Rivera; James Severson, vice president of Kirkland, WA-based Veratect; and H. Stewart Parker, the founder and CEO of Seattle-based Targeted Genetics.
Ranken and Wilcox have been pounding the pavement with 50 conversations, pitching the idea to local investors, technology transfer managers, entrepreneurs, and government officials. The idea has gotten a friendly reception from Travis Sullivan, a senior official at the U.S. Department of Commerce who works for Secretary Gary Locke, the former Washington Governor. Ranken is also seeking support from the office of U.S. Rep. Adam Smith, a Democrat from Tacoma.
Bionager has an economic goal of generating investment returns, and an emotional goal of creating more jobs in the local area, Wilcox says. He lamented how many skilled innovators feel the need to migrate to Boston or San Francisco because of the relative lack of biotech startup funding in the Northwest. “We want to help talented people here find work here,” Wilcox says.
I asked these guys why anybody would support this, because there are already programs set up to promote early-stage prototype development. There’s the Seattle-based Accelerator that is backed by high-profile VCs, the Small Business Innovation Research grant program from the federal government, the Life Sciences Discovery Fund set up by Washington state, and the Technology Gap Innovation Fund at the University of Washington, to name a few.
Of course, none of those organizations by themselves really provide enough oomph to singlehandedly drive a local innovation cluster. Venture capitalists, as Chad Waite of OVP Venture Partners told Ranken, “invest in development, not research.” The SBIR grants can take a year to process, and the state grant program just suffered a 41 percent budget cut. Wilcox also sees an opportunity to fill a void in the market for incubating promising medical device technologies.
The real reason the founders want to bet on Bionager? More money just might be available, and the time may be right as the feds try to jolt the U.S. economy back to life.
“The big money will have to come from the federal government in this economy,” Ranken says. “The planets are aligned now. It’s a once-in-a-lifetime opportunity.”
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