Guest Column

West Michigan is destination for life sciences startups

April 29, 2016
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West Michigan’s legacy as a manufacturing region began to take a turn two decades ago with the founding of the Van Andel Institute and the birth of the Medical Mile. Since then, the area has built a new reputation, becoming one of the fastest-growing life sciences clusters in the country.

We’ve reached a point at which impactful institutions across the life sciences sector are calling West Michigan home, with more than 44,000 local jobs related to biosciences. Global leaders in pharmaceutical manufacturing, health care services, and preclinical and biomedical research are headquartered here. Over the past decade, the region has experienced a 38.7 percent industry job growth, well above the national average of 21 percent.

It’s only natural, then, that entrepreneurs and small startup companies in the industry would be attracted to this region. And with support from organizations like the Michigan Economic Development Corp., there has been an abundance of early assistance. From providing affordable lab space to connecting entrepreneurs with an extensive network of mentors to offering business accelerator and incubator programs, the entrepreneurial ecosystem has been growing at a remarkable pace.

Until recently, there was still a missing puzzle piece: capital.

The mix of state-funded incubators like the Grand Rapids SmartZone, business competitions, research partnerships and university collaborations has allowed entrepreneurs and small startups to put their ideas into motion. Some were highly successful, wisely maximizing their use of the resources available. Ultimately, though, there hasn’t been the access to capital needed to take many companies to the next stage. Until now.

In its 2016 Annual Research Report, the Michigan Venture Capital Association revealed “Michigan-based venture capital firms have more capital under management than ever before: $2.2 billion, a 47 percent increase in capital used to power Michigan’s entrepreneurial economy in the last five years.” The report identified life sciences as one of the top two sectors of focus for investment deployment in 2015, along with information technology.

It will take time — and a continued upward trajectory of investing — to build a truly sustainable environment that can attract and support life sciences startups, but West Michigan is already seeing the impact of this increase.

One example is Kalamazoo-based Armune BioScience, an emerging leader in breakthrough cancer diagnostics. Armune initially received funding and business support through a variety of resources, including MEDC’s Entrepreneurship & Innovation initiative, which provided early funding and critical counsel, and helped Armune attract additional financial support.

Last year, the company launched its first product, Apifiny, a blood test developed in partnership with the University of Michigan to detect prostate cancer at its earliest stages. Today, Armune is a growing venture-backed company, with international reach and a global laboratory network. The company recently raised nearly $9.1 million as part of a Series A capital raise to support further commercialization, which came from 46 investors, according to a regulatory filing with the U.S. Securities and Exchange Commission.

Another local groundbreaking company benefiting from the VC increase is RespondWell, a Grand Rapids-based digital health company that has developed software allowing physical therapists and physicians to engage patients regardless of physical location through telerehabilitation. The concept of virtual health care is gaining significant momentum throughout the industry, and this unique approach aims to increase adherence rates to prescribed rehabilitation, improve outcomes and reduce costs. The company is backed by multiple investments, including Start Garden and Michigan Accelerator Fund I, and is seeking another funding round to support further development.

These are just two examples of the many West Michigan life sciences startups that have felt the impact of this puzzle piece coming into place.

While this increase should be celebrated, we won’t ignore the shortfalls that still exist. The MVCA also reported venture firms with a presence in Michigan missed their fundraising target by a substantial margin, and the MVCA experienced a drop in VC firm membership for 2016. Additionally, access to capital beyond venture funding is a glaring hurdle. There is work to do — for policymakers, for economic development organizations, for universities. A collaborative effort across the state needs to keep the momentum going, to recognize this increase cannot be a “boom” or a peak.

The life sciences community of West Michigan has worked for two decades to build this reputation as a hotbed of innovation. To live up to this standing, the entrepreneurial ecosystem will need to continue to build on that reputation and sustain an environment that attracts, welcomes and supports early-stage life sciences companies.

Fred Molnar is vice president of MEDC’s Entrepreneurism and Innovation and executive director of the Michigan Life Science and Innovation Center.

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