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 firstname.lastname@example.org.