Chicago biotech incubator gets state funding
Tuesday, January 28, 2014
By Greg Hinz, Crain's Chicago Business
Thanks to a big check from the state, a second government-sponsored business incubator, this one to house biotech and pharmaceutical startups, is moving toward launch in Chicago.
Gov. Pat Quinn is planning to announce in his State of the State speech tomorrow that the Department of Commerce and Economic Opportunity is making a $2.5 million grant to the center, which will be downtown, possibly at the Merchandise Mart, and modeled on the highly successful 1871 incubator, which has served as a base for dozens of emerging digital firms. Another $1 million will come in the form of a loan, from either the commerce department or the Illinois Finance Authority.
Tentative plans for the facility were first announced almost a year ago, and insiders say it's taken that long not only to line up initial funding but to woo top medical and pharmaceutical companies to participate and recruit an executive director. He is Patrick Flavin, a principal in Flavin Ventures LLC, a family-run life-sciences venture-capital outfit in Woodridge.
In addition, insiders say, Mayor Rahm Emanuel, who came up with the original idea, and Mr. Quinn, who is providing the startup capital, had to come to a meeting of the minds. That appears to have come about due in part to intermediary Michael Sacks, vice chairman of World Business Chicago, the city's corporate recruitment arm.
The effort has been worth it, says J.B. Pritzker, managing partner of Pritzker Group Venture Capital and chairman of ChicagoNext, the new ventures unit at World Business Chicago.
"It's going to happen," Mr. Pritzker said in an interview. "It has a lot of support in the pharmaceutical and bioscience community. The startups are thrilled. This could be a galvanizing place" for a city that long has boasted of its biotech potential but never quite delivered.
The center will occupy about 25,000 square feet, about half the size of 1871, and is to open later this year, according to the state. It will be a place for entrepreneurs and industry professionals to meet one another and exchange ideas, as well as a space for startups that can't afford offices elsewhere.
The initial grant of $2.5 million is slightly larger than the $2.3 million 1871 got from the state when it launched in 2012.
"This is the kind of flag that Illinois needs to plant in the ground," said Adam Pollet, director of the Department of Commerce and Economic Opportunity. The one-stop shop will help "drive our new company formation," he said.
One thing that's not clear yet is where this new hub will be located. The Mart, where 1871 is based, is a front-runner, but other space is being eyed, too, I'm told.
Another question is the level of commitment from big local players in the industry, including Abbott Laboratories, AbbVie Inc., Baxter International Inc., Mead Johnson Nutrition Co. and Takeda Pharmaceuticals USA Inc.
All "have been at the table" the last year and generally are supportive, I'm told. Mr. Pollet said some have signed letters of commitment, but he declined to name them, saying only that private capital invested in the center eventually will exceed the state's backing. It's worth noting that among members of the center's board will be Norbert Riedel, who recently retired as chief scientific officer at Deerfield-based Baxter. (He also is a director of the Illinois Biotechnology Industry Organization.)
In an interview last year, Paragon Pharmaceuticals LLC CEO Jeff Aronin, who will co-chair the center board along with Horizon Pharma Inc. CEO Tim Walbert, said such companies need to be involved for the center to live up to its potential.
11 a.m. update —Organizers of the center have asked me to emphasize that medical technology, including medical devices and medicine-related information technology, will be a prime focus of the center, in addition to biotech and pharma.