The Way I See It… by Michael C. Volker
B.C. holds promise for Life Sciences startups
When it comes to
building a Life Sciences cluster, British Columbia is booming! It’s now commonplace to hear about successful
companies such as QLT, Angiotech, AnorMED,
Cardiome, and Inflazyme in
this province. However, over the past
year, numerous start-up companies such as Aspreva, Novation, and ARC Pharmaceuticals have also starting
appearing on the radar screen for B.C.’s thriving life science cluster. And there are many more that are quietly
taking root as they move technology from the lab bench to the private sector.
To accelerate the
innovation process in B.C., the Ministry of Competition, Science and Enterprise
contributes in a big way. A refundable
30% tax credit is available to investors who invest in companies registered as
Eligible Business Corporations under the
Small Business Venture Capital Act.
This has spawned a
variety of Venture Capital Corporations (VCCs) in
B.C. These VCCs, which invest modest sums - typically
under $1 million - at early stages, are essential in funding early stage
ventures to get them to the stage of development that is of interest to
traditional, institutional venture capitalists.
Some very recent
examples of these startup funds, formed by angel investors, are the B.C.
Advantage Fund, which has a management team focused on Life Sciences ventures,
the Western Universities Technology Innovation Fund (WUTIF), and the Pender
Growth Fund. These funds also provide smaller investors with an opportunity to
participate in the sector’s growth.
Another very
different model is a small VCC called Building Biotech (VCC) Ltd. Started by angel investors Joyce Groote and Rick Walter this fund operates more as an
investment club since no management costs are charged. Its current 15 investors
meet on a regular basis, cooperate to conduct due diligence and provide
expertise and access to their extensive network to early stage life science
companies. Each investor contributes $25,000. They also organize the Life
Sciences Angel Network (LSAN).
The evolution of
angel networks in B.C. has contributed to the funding challenge as well. Each
month, there are now regular breakfast meetings that provide a platform for
companies to make their pitch to angel and seed investors. LSAN provides
frequent occasions for life science companies to present to angels who often
provide knowledgeable advice as mentors. In just over a year, more than 50% of
the presenting Life Sciences companies have raised a cumulative total exceeding
$25M.
Immediately upon
accessing Angel financing, life science companies start to look for their next
round for significantly larger funding.
Tremendous time and energy go into finding venture capital to provide
these larger rounds. An Investor
Compendium is now available that helps to shorten and simplify this
process. Over 1500 North American
companies and groups that claim to invest in life sciences can be found on a
variety of websites. However, much of
that information is fragmented and out of date.
This Investor Compendium has narrowed the field to under 200 currently
active investors that have made investments since the start of 2002. Both hard copies and a searchable CD-ROM are
available through BCBiotech at www.bcbiotech.ca.
Further, the B.C.
government handily augments Canada Customs and Revenue Agency’s SRED
(Scientific Research and Experimental Development) tax credit program that
gives B.C. startups up to 68 cents back on each dollar spent on direct research
costs such as researchers’ salaries.
On the Global
financial scene, B.C. has also managed to establish itself as an important
meeting place for global biotech leaders at its Annual BioPartnering
North America (BPN) event (February 8-10, 2004). This event provides a showcase for companies
seeking financing and partnerships at all levels. Hosted by BCBiotech,
BIOTECanada, BioAlberta and
Technology Vision Group LLC, this meeting is the North American version of the
distinguished BioPartnering Europe conference held in
London each October, which is a cornerstone of the annual conference
calendar. Last year was the 1st
Annual BPN with over 600 delegates representing over 350 companies from 20
countries.
The
way I see it, B.C.’s making the right moves to become home to a thriving Life
Sciences industry!
Michael Volker is a high technology entrepreneur and director of Simon Fraser University’s Industry Liaison Office. He oversees Vancouver’s Angel Technology Network and is past-Chair of the BC Advanced Systems Institute and the Vancouver Enterprise Forum. He may be reached at mike@volker.org.