Illumina (San Diego) launched the Illumina Accelerator Program, touted as the first-ever genomics-focused business accelerator back in mid-February. The company says its goal is to speed the time to market and lower the barriers to entry for entrepreneurs, start-ups, and early-stage companies working on “scientifically and commercially promising” next-generation sequencing applications. While the fact that the accelerator is committed entirely to genomics is a new twist, housing early-stage companies in accelerators and incubators is part of a rapidly proliferating trend in the life sciences. Driven by the lack of investment capital for early-stage life science companies, the desire to stimulate local economies through entrepreneurship, and the need of larger firms to scale-back internal research and development (R&D) while eyeing strategic expansion opportunities, the incubator industry has scaled up significantly since the economic downturn in 2008. “When you look at the number of academic ideas out there and the size of investment available through venture capitalists, there is a big gap,” Mostafa Ronaghi, Ph.D., Illumina’s chief technology officer, told Bloomberg. “This is especially true in genomics, where it’s more difficult for companies to get started.” Illumina’s accelerator is relatively unique with its exclusive focus on genomics and its corporate backing, but like other accelerator programs, Illumina’s is six months long and provides invited participants with access to technology and business guidance. Specifically, Illumina has pledged $100,000 in support through access to sequencing systems, reagents, and fully operational lab space. In addition, participants will have access to mentorship through Illumina’s global customer and partner support services, including financial modeling, licensing and technology transfer support, and legal and human resource assistance. On the financial side it has been reported that Illumina will make the investment in each company in exchange for a 10 percent share of the company’s common stock. Accelerator partners Silicon Valley Bank and billionaire technology investor Yuri Milner will help with financial resources through provision of banking services, credit, and a $100,000 convertible note. Illumina says it will initially select three companies every six months with the first session beginning this August. While Illumina is likely motivated, at least in part, by accrual to its own financial benefit if genomics companies thrive and in turn buy more Illumina products, there is a surge in life science and biotech accelerator activity across the country. Business incubators date back to the 1950s, but there has been a recent explosion in interest. According to the National Business Incubation Association (NBIA), the total number of business incubators reached 1,250 incubators in the United States at the end of 2012, up from just a dozen such facilities in 1980. Life science incubators are emerging not just in established biotech clusters, such as Boston and San Diego, but also in smaller cities like Albuquerque, N.M., and New Orleans, and even in rural areas. “The term incubator
can mean different things to different people,” says Hanson Gifford III, managing partner at the Foundry, a medical device incubator in Menlo Park, Calif. “In some parts of the country it can be an economic development tool by providing some space and coffee, but we are serial entrepreneurs looking for an opportunity where there is clinical need for a dramatically better solution and where you can get from start to [Food and Drug Administration] approval or a commercialized product without spending the national debt and spending three lifetimes. Incubators are a halfway step to get companies along.”
|General Traits of Incubators, Accelerators While the terms are often used interchangeably, there are some general, historical differences between incubators and accelerators.|
|Incubator ||Accelerator |
|Focus||Science-based businesses||Technology start-ups including gaming, social networks, apps, and software|
|Sponsors||Traditionally include universities (32 percent), economic development organizations (25 percent), and government (16 percent)||Rely more upon serial entrepreneurs and private investors|
|Length of Stay||Typically two years to three years||Six months|
|Source: Adapted from NBIA|
NBIA says the most common goals of incubation programs are creating jobs, enhancing a community’s entrepreneurial climate, retaining businesses in a community, and diversifying local economies. In 2011, North American incubators, the NBIA says, assisted about 49,000 start-up companies, which in turn provided full-time employment for nearly 200,000 workers and generated annual revenue of almost $15 billion. Some worry, though, that the rapid growth of science and technology incubators in recent years will outpace the ability for incubator graduates to attract investment capital or the attention
of industry. “The metrics are very easy to measure and are very straightforward. Did the company survive? Did it find funding? Or was there a transaction or exit by placing the technology with an existing company upon completion of the incubation period?” explains Wade Fallin, CEO of VentureMD, a medical device incubator in Salt Lake City. “As seed stage venture capital has dried up and large medical device companies have scaled back [their R&D] there has been very high interest in incubators, as they take away some of the investment risk.” Takeaway: Economic considerations have generated interest in incubators and accelerators as efficient means for early-stage companies to gain access to expertise and rapidly assess their business case. In an environment of little investment in early-stage companies, life science incubators are expected to continue to foster start-ups and provide a reduced risk means for investors and larger medical device companies to appraise new technology. Side Box: Diagnostics Companies Currently in Incubators or Accelerators EnterpriseWorks
- BioAnalytics: Focused on designing the next generation of immunoassay technology that can reduce the number of steps required for protein quantification, resulting in faster multiplexed assays.
- GlucoSentinent: Transforming the personal glucose meter into a device that is capable of quantitatively detecting other nonglucose targets.
- Oracle Biosciences: Developing a single gene-based clinical assay for diagnosis and prognosis for Basal-like breast cancer.
(New York; 2013)
University of Missouri Life Science Business Incubator
- Girihlet: Developing mitochondrial DNA based biomarkers for cancer and developmental disorders based on technology developed at Mount Sinai Hospital (New York).
- Gray Box Biology: Developing a prototype medical device that can diagnose drug-resistant tuberculosis in patients in low-resource areas. The device, Bronx Box 2.0, is based on technology developed at Albert Einstein College of Medicine (New York).
- Immunovent: The Local Allergy Mucosal Brush (LAMB) test is the first local allergy test that can accurately diagnose a significant number of both airborne and food allergies that are currently undetected by traditional allergy testing methods.
- Junco Labs: Working on a handheld “lab-on-a-chip” device that can perform rapid and inexpensive diagnostic tests at the point of care.
(Columbia, Mo.; 2009)
Student Venture Incubator/Yale Entrepreneurial Institute
- Columbia Diagnostics: A spinoff from University of Missouri is developing companion diagnostics for individualized cancer therapy.
- Viator Technologies: Another University of Missouri spinoff, it is building technology for early detection of circulating melanoma tumor cells.
(New Haven, Conn.; 2007)
- »Ancera: Focusing on rapid cell separation and pathogen diagnostics using label- and labor-free methods to provide low-cost, high-throughput diagnostics in under 10 minutes.