Massachusetts Life Center Approves $2.2 M in Grants for Biotech

biotech2The Massachusetts Life Center recently approved $2.2 million in grants for biotech companies to reach early-stage milestones. The move is an attempt to fund startups earlier in their lifecycle. According to Susan Windham-Bannister, the outgoing president of the Massachusetts Life Center, the state often loses companies to other states.

Although the center has provided loans and grants in the past, this is the first time they are giving grants to companies to help them achieve early milestones. State-sponsored grants up to $200,000 were offered for the completion of such milestones as prototype development, market analysis, clinical trials or business plan development.

Ari Maayan is one of the original pioneers of the biotechnology industry in Massachusetts, at a time when it was still called industrial microbiology. Maayan explains, “I was employee #2 in Genzyme and employee #14 in Biogen. I was one of the founders of the Association of Biotechnology Companies, the flagship industry organization. I then started up American BioDesign, which was a consulting company that provided process design, product design and facilities design for start-up biotech companies. I also consulted to numerous VC and investment banking firms, providing technical and business due diligence on many of the start-up biotech companies in the Bay State.

“This was in the days when biotech start-up capital was plentiful and relatively easy to acquire. I have watched the process of the regression of biotech start-up capital since then. The need for the early stage “gap funding” is vital to the continuation of the role of leadership of the Bay State in the biotech industry. In today’s venture funding climate, the lack of such funding will strangle the start-up position of the State’s biotech industry.”

Michael Salgaller, Ph.D., President and COO Executive and Senior Management for Biopharma, shares his thoughts. “Such state-sponsored economic development activities have a mixed record of success in producing successful entrepreneurial activity in the biotech sector. In Maryland, the Technology Economic Development Corporation (TEDCO), has been recognized for several years as the #1 funder of early-stage companies. Nonetheless, the state remains at the second-tier of biotech hubs. These types of funds do provide early validation, as well as critical support for proof-of-concept work and/or operation activities. And many such companies go on to secure risk capital.

However, there is little data that state economic development funds give life-blood to deserving companies that would have died otherwise. Many argue funds go to stronger companies that would have secured angel or high net-worth individual monies anyway. Investor tax credits and similar incentives have shown to generate additional and higher risk capital investment in states such as Maryland and California. States whose legislatures decided not to maintain such tax credit programs – including Washington – realize they are at a comparative disadvantage that $50K from a state program only partially overcomes.”

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