Philadelphia Adopts Regional Approach to Start-up Funding

It’s not getting any easier to secure seed funding for life-sciences start-ups. Despite a reported upsurge in angel investment last year, “the total number of early-stage deals [in] 2006 does not match the numbers of 1998. That year, 151 life sciences companies received initial funding as compared to 103 in 2006,” writes Barbara S. Schilberg in the current issue of Genetic Engineering and Biotechnology News. Schilberg is managing director and CEO of BioAdvance, a non-profit group charged with assisting life science firms in south eastern Pennsylvania. It’s the group’s focus on a particular region within a state (versus the state as a whole) that could signal a trend among public-capital venture funding organizations.

That trend has at least one powerful argument backing it up: Start-ups are more likely to benefit from the academic and business infrastructure of their immediate region as opposed to the state, especially — as in Philly’s case — when a sizeable life sciences community already exists there. BioAdvance’s regional approach seems to be working. A $20 million seed fund financed by a portion of Pennsylvania’s tobacco settlement resulted in a tripling of the number of life sciences start-ups in the area between 2003 and 2005. And even though BioAdvance has so far invested only $11 million of its allotment in regional life sciences firms, the result has been “an additional $150 million coming into the region through these companies in less than four years,” Schilberg says.

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