BioAccel Announces Major Funding From Economic Development Administration For Developing Early-Stage Investment Ecosystem In Arizona And Southwestern U.S.Tuesday, February 9, 2016
FOR IMMEDIATE RELEASE
February 9, 2016
Contact: Carol A. Poore, Ph.D.,
Vice President, Development,
BIOACCEL ANNOUNCES MAJOR FUNDING FROM
ECONOMIC DEVELOPMENT ADMINISTRATION FOR DEVELOPING
EARLY-STAGE INVESTMENT ECOSYSTEM IN ARIZONA AND SOUTHWESTERN U.S.
Phoenix, AZ (Feb. 9, 2016) — The U.S. Economic Development Administration (EDA) awarded BioAccel a $250,000 grant for the Southwest Integrated Investment Ecosystem Development Project, enabling BioAccel to create a robust early-stage investment ecosystem in Arizona and the Southwestern United States to accelerate sustainable new company growth in the biosciences and health technology.
U.S. Secretary of Commerce Penny Pritzker announced 25 awardees to receive $10 million under the Economic Development Administration’s (EDA) 2015 Regional Innovation Strategies (RIS) program. The 2015 RIS program is managed by EDA’s Office of Innovation and Entrepreneurship and is designed to advance innovation and capacity-building activities in regions across the country through two different competitions – the i6 Challenge and the Seed Fund Support Grants competition. While 17 i6 Challenge awards were made, BioAccel’s award was one of only eight Seed Fund Support grants.
The federal Seed Fund Support grant will help BioAccel launch three early stage funds – two in Arizona focused on the biomedical sector and one regional focused on health IT and software-enabled medical devices – to provide early-stage seed funding for qualified bioscience entrepreneurs. The grant also will expand BioAccel’s programs that build a fully-integrated early-stage investment ecosystem by identifying and integrating participation of local and regional investors, business leaders, and economic development organizations to support biomedical start-up companies.
Since inception in 2009, BioAccel has supported the launch of 17 game-changing healthcare device companies through early-stage funding, mentoring, and training, filling an unmet need in Arizona’s emerging bioscience sector.
“Simply put, BioAccel’s unique and focused mission is to drive economic development through the commercialization of innovative research in the life sciences,” said MaryAnn Guerra, BioAccel chief executive officer and founder. “EDA’s prestigious regional innovation grant will allow BioAccel to expand our leadership in developing a bioscience investor ecosystem in Arizona and Southwestern United States, transforming research discoveries into new business opportunities with a focus on medical diagnostics, therapeutics, devices, tools and services.”
Through the EDA’s Cluster Funds for Seed Grant funding, BioAccel will complete the launch of three venture funds – two investment funds in Arizona, and a regional venture fund.
BioAccelerator Fund I already underway is an early-stage venture capital fund focusing on biomedical technology companies that have successfully progressed through BioAccel’s diligence and investment programs. This grant will leverage innovations borne from BioAccel’s federal- and municipal-funded programs including a federal i6 challenge grant working with university students, and local BioInspire economic development incubator program partnered with City of Peoria and featuring a bioscience laboratory facility. The fund will bridge qualifying BioAccel portfolio companies to angel investors.
Arizona Founders Fund I, a seed-stage venture capital fund targeting software and Internet startups with annual revenues of $1 million or less. The fund will focus on health information and health care related technologies and software-enabled medical devices complementary to BioAccel’s medical device companies that frequently include a software component. The fund will provide seed capital, investment leadership, and access to follow-on capital and strategic partnerships.
BioAccel also will work to create a BioAccelerator Fund II, a larger, regional fund ranging from $15 million to $25 million, to expand early-stage proof-of-concept funding for commercially viable biomedical device and technology companies in Arizona, Southern California, and possibly New Mexico and Nevada, as well as provide early-stage bioscience business mentoring to accelerate commercialization.
Finally, this funding from EDA will help BioAccel to expand the state and regional educational opportunities that are necessary to sustain an active, interdisciplinary early-stage investment ecosystem for bioscience investors, business leaders, economic development organizations, entrepreneurs, scientists, students, and philanthropists.
“Despite Arizona’s great progress in the bioscience sector since 2002, by 2013, 33 other states had deployed new seed capital funds for biomedical innovators. Arizona struggled to launch an early stage biomedical venture fund until BioAccel began the BioAccelerator Fund I over a year ago,” Guerra noted. “Our state and region must establish multiple early-stage funds, and the need to ensure that investor participation extends beyond personal investment silos has never been greater.”
This EDA grant supports the development of the organizational infrastructure needed to launch a new venture capital fund. Resources will focus on identification and recruitment of fund management professionals, performance of marketing, fundraising, and pipeline development functions, development of an integrated investment ecosystem, performance of diligence and business/technical services, and development of a long-term sustainability plan.
“BioAccel is one of the best-positioned organizations to achieve the objectives outlined in the EDA’s Federal Funding Opportunity, and I’m honored to be a voice for Arizona in Congress in the continued growth and prosperity of our healthcare and biomedical companies in Arizona,” noted Representative Kyrsten Sinema, Arizona’s 9th District.
This year’s eight EDA Seed Fund Support grants provide funding for to support feasibility, planning, formation, or launch of cluster-based seed capital funds that provide equity-based investments in early-stage, innovation-based, startups that have high growth potential but that often struggle to secure funding early in their lifecycles.
“Phoenix’s healthcare and biomedical sectors are rapidly growing, and BioAccel’s new project will help create even more growth in these industries and further strengthen our local economy,” said Arizona Congressman Reuben Gallego, Arizona 7th District. “I want to congratulate BioAccel on receiving this significant award. All Arizonans should have access to quality, affordable healthcare services and BioAccel’s work is helping us to achieve that goal.”
BioAccel was also tapped in late 2015 to join a prestigious Los Angeles County innovation hub, contributing best practices as a regional expert to help LA County turn its biomedical economic development efforts outward to a broader region in order to remain competitive globally.
Enrico Picozza, Partner with HLM Partners in Boston and Chair of BioAccel’s Council of Advisors noted that the EDA grant will help BioAccel achieve more effective “bench to bedside” transition, from research innovation to commercialization.
“HLM Ventures is committed to identifying, scaling up, and accelerating ideas that will make the world work better, and we look forward to continue partnering with BioAccel to build a better model for investing in early stage biotech and med tech companies,” Picozza said.
In enhancing the investment ecosystem through the creation of three investment funds, BioAccel will expand the ability to address the reasons most bioscience companies fail, including lack of early-stage funding, lack of intellectual property protection and development, lack of business focus despite meritorious scientific discovery, limited or no access to pre-clinical testing and feedback, lack of business plan review by qualified, senior business executives, lack of access to competitive roadmaps, and lack of qualified business leadership.
“W.L. Gore & Associates, Inc. is a strategic industrial partner with BioAccel and participates on its Council of Advisors,” said Paul Begovac, a Gore business technology leader. “Gore looks forward to providing industrial strategic advice and review of proposals as well as business, technical and market advice to BioAccel’s portfolio companies to assist in successful commercialization.”
Of critical importance, BioAccel’s endeavors support transformative measures noted by the Flinn Foundation’s long-term Bioscience Roadmap to make Arizona and the Southwestern U.S. region globally competitive as a national leader in select areas of the biosciences, including risk capital formation – pre-seed and seed capital to support young firms in formative stages.
BioAccel is a uniquely qualified organization that has carved a niche in Arizona, addressing areas targeted by EDA’s Cluster Seed Funds and i6 Innovation Challenge grants,” said Ron Shoopman, chief executive officer of Southern Arizona Leadership Council, member of the Arizona Board of Regents and chair of the Flinn Foundation Bioscience Roadmap Steering Committee. “The second 10-year leg of the Flinn Foundation Bioscience roadmap has substantial focus on innovation, regional connectivity, and expanding Arizona’s risk capital continuum – all goals of BioAccel’s programs.”
The economic impact of bridging the bioscience early-stage Valley of Death
Few people know that Arizona is a top-emerging bioscience state. From 2002 to 2011, while the U.S. posted a 12 percent gain in bioscience jobs, Arizona’s bioscience jobs grew 45 percent -- more than 30,700 jobs, to reach a total of 99,018 bioscience jobs during that time period. The biosciences are vital to both Arizona’s future economic stability and quality of healthcare. Unfortunately, a large percentage of bioscience products developed in Arizona fail during the early stages of business start-up due to our young, and slowly emerging bioscience and venture capital ecosystem.
Every industry sector has a Valley of Death that challenges entrepreneurs in moving their great concepts swiftly into commerce. The Valley exists primarily due to a lack of funding to commercialize promising early-stage technologies. According to recent research, the primary reason cited by investors for that lack of funding is “excessive risk”. The reality, however, is that many early-stage investors simply lack the technical expertise needed to evaluate risk, and, as a consequence, most regions chronically under-invest in early stage companies.
For example, in 2012, Arizona academic institutions received more than $452 million for bioscience research, resulting in discoveries that could have been commercialized. However, during that same time period, available proof-of-concept early-stage funding in Arizona was less than $5 million – or less than one percent of academic research.
According to the Kauffman Foundation and National Center for Entrepreneurship, only an additional 6 percent of federally funded research discoveries could result in a $1.4 trillion to $3 trilling impact on the national Gross Domestic Product. BioAccel’s EDA grant funding represents a significant investment in both the region’s and Arizona’s biomedical sector.
BioAccel is an Arizona 501(c)-3 nonprofit organization based in metropolitan Phoenix, Arizona. BioAccel provides funding and expertise at each critical stage in the commercialization continuum, and helps resolve known challenges, accelerate technical development (e.g. proof of concept), and de-risks the business (e.g. early regulatory strategy, securing IP, etc.). This seamless approach quickly adds value to early-stage companies and encourages downstream investment.
BioAccel’s role in developing an early-stage biomedical investment ecosystem is analogical to a relay race: Assemble the best team and ensure that “handoffs” are immediate, efficient and effective. The outcome is the accelerated development of new bioscience companies with higher early-stage valuations, thus better investments.
However, a critical missing link in traversing the biomedical “Valley of Death” is access to an early-stage venture fund to support these companies. To conclude the analogy, the last runner on the team is needed to sprint to the finish line, or in reality – to position the company for true venture financing. BioAccel symbolizes that “last runner” by providing early-stage investment funds for qualified biomedical device and technology entrepreneurs through a rigorous due diligence process to reduce early investment risk.
BioAccel is the leading organization in the United States dedicated to developing a robust bioscience ecosystem including entrepreneur development, and creation of a validated pipeline of commercially viable bioscience technology to transform healthcare delivery. Our mission is to work with qualifying entrepreneurs and their early-stage bioscience technology and medical device companies to identify start-up funding, as well as provide training and mentorship to accelerate commercialization, improve healthcare through innovation, and diversify economic development.
Since inception in 2009, BioAccel has supported the launch of 17 game-changing healthcare device companies through early-stage funding, mentoring, and training, filling an unmet need in Arizona’s emerging bioscience sector. BioAccel has helped our portfolio of bioscience entrepreneurs successfully navigate the “Valley of Death” while creating healthy communities through vanguard bioscience solutions and supporting Arizona economic growth.
All BioAccel programs are dedicated to achieving our mission: To work with qualifying entrepreneurs and their early-stage bioscience technology and medical device companies to identify start-up funding, as well as provide training and mentorship to accelerate commercialization, improve healthcare through innovation, and diversify economic development.
In addition to our start-up investment programs – Technology Advancement (TAP) and New Venture Development (NVDP) – BioAccel’s additional programs provide training, mentorship, and early-stage start-up funding through BioAccel’s unique, annual Solutions Challenge competition featuring the “Scorpion Pit” judged by Arizona-based bioscience and technology executives.