2008 Industry Outlook
Riding the momentum: The biotech industry is honing in on seed and early-stage venture capital and workforce development.
RESEARCH TO MARKET: Sunrock Ventures is evaluating research by University of Miami biomedical engineering professor Herman S. Cheung (left) for potential licensing, says venture capitalist Jeffrey Wolf (right). Cheung specializes in stem cell-based tissue engineering and regenerative medicine.
[Photo: Eileen Escarda]
“We haven’t seen a slowdown yet in our momentum,” says C. Russell Allen, president of BioFlorida, a statewide trade group that focuses on commercializing life sciences research. But, he adds, “The large incentive deals, we understand, can’t last forever.” So with the state budget feeling the pinch from lower sales tax receipts, the biotech industry is focusing more on improving the overall climate for technology company growth rather than doling out incentives like those used to attract Scripps Research Institute, the Burnham Institute for Medical Research, SRI International and Torrey Pines Institute for Molecular Studies.
On the money front, the good news in Florida is that the average size of venture capital life sciences deals is up 88% since 2005 to $17 million, according to a November report by Lakeland life science analyst Michael Schmitt. The bad news is that those big deals are for business expansions, not startups.
For decades, Florida’s tech leaders have bemoaned a lack of seed capital. Now there are some signs that the $250,000 to $2 million needed to spin off university and institute research into businesses may start to flow in 2008. The state is launching a Florida Opportunity Fund that will funnel $29.5 million into venture capital companies, which will then match the state funds dollar for dollar and invest in Florida-based businesses in life sciences, information technology, advanced manufacturing processes, aviation, aerospace, homeland security and defense.
David L. Day, director of technology licensing at the University of Florida, says that while a number of angel investment funds have started up around the state, the state wants more venture capital funds to locate in Florida; in addition to multimillion-dollar investments, they often invest small amounts of seed or early-stage capital locally. Says Day, “Almost all VCs have a project or two that are very early stage, and they usually do them pretty close to home.”
Florida is hoping to see more firms like Sunrock Ventures, which in October opened offices in Tampa and Miami. The three partners, Tate Garrett, Matthew Shaw and Jeffrey Wolf, all grew up in Florida and worked outside the state before launching Sunrock. The firm is raising $100 million and plans to invest in 18 to 24 healthcare, IT and service-sector companies in Florida and the Southeast. “We would expect a substantial percentage to come from Florida,” says Wolf, who focuses on biomedical and life sciences ventures. The firm plans to invest $4 million to $7 million in each company in several rounds, perhaps including seed capital.
The second area of industry focus is on workforce training. Science and technology education in middle school and high school is the No. 1 focus for BioFlorida this year. The group is putting together a Bioscience Education Foundation to build on its annual Career and Education Exposition, held in schools across the state to encourage careers in science. The expo as well as the foundation will provide training for teachers, instructional CDs and DVDs and bring scientists to classrooms.
“There’s a lot we can do with a relatively small amount of funding,” says Allen, who is also promoting a statewide curriculum for biosciences.