Why the state is doubling down on incubator spaces

Originally published April 27, 2014 in Banker & Tradesman.


Chemists Nokole Seil, right, and Samantha Beanvegard work on polymer composists for start up company, 206 Ortho, which rents space at the Lowell medical device incubator, M2D2. Photo by Erin Baldassari/Banker & Tradesman.

Chemists Nokole Seil, right, and Samantha Beanvegard work on polymer composists for start up company, 206 Ortho, which rents space at the Lowell medical device incubator, M2D2. Photo by Erin Baldassari/Banker & Tradesman.

The Massachusetts Life Sciences Center (MLSC) is doubling down on funding for incubator spaces across the state, committing more than $11 million to support capital projects this year.

That figure is more than double the $5 million invested last year, already a dramatic increase from the less than $1 million in capital funding from every prior year combined. MLSC Executive Director Dr. Susan Windham-Bannister said it’s all part of a strategy to use smaller companies to fuel the growth of the economy, both by creating new jobs and by attracting larger companies to the commonwealth.

“We really want there to be spaces for young companies that start up all around the state to be able to find room to grow,” Windham-Bannister said. “We’ve learned that the creation of a vibrant pipeline of young companies not only keeps interesting developments in life sciences in the state, but it’s a magnet for larger companies as well.”

In a 2013 report by the Boston Foundation on the role of the Life Sciences Center as a catalyst in the Massachusetts economy, the authors note that the proliferation of small companies drive the decision of larger companies to locate near them.

“This permits the large companies to closely monitor the progress of smaller firms and buy the most promising ones before ‘Big Pharma’ competitors or other medical device manufacturers can make a bid,” the report reads. “To use a metaphor from nature, the large, globally important life sciences firms want to feed in the waters where the minnows are swimming.”

Although the founders of the state’s incubator spaces are quick to differentiate themselves from one another, they share many similarities in their approach to supporting emerging companies while also offer niche services.

In many ways, Kendall Square’s newest coworking wet lab and incubator space, LabCentral, epitomizes the state’s goals when it comes to investing in life sciences initiatives, and the state’s funding of the space reflects that. Of the nearly $17 million that has been committed for capital projects by the MLSC, the majority, or $10 million, has gone to LabCentral, which offers entrepreneurs access to expensive lab equipment.

LabCentral co-founder Peter Parker said the difference between LabCentral and other incubators across the state is the fact that it’s in the heart of the pharmaceutical world.

Windham-Bannister said LabCentral combines industry investments, venture capitalists funds, and support from academic institutions, fostering a network between the three sectors. The state gave two $5 million grants to the shared lab company in part, Windham-Bannister said, because they’ve been able to leverage that investment and return three times as much in matching funds.

The company boasts a roster of industry sponsors, including Triumvirate Environmental, Johnson & Johnson, Pfizer, Cushman & Wakefield and the Novartis Institute for Biomedical Research, to name a few. At the grand opening of LabCentral on April 2, Johnson & Johnson Innovation Center director Robert Urban said companies around the world were relocating to Massachusetts to take advantage of the medical innovations taking place here, and Johnson & Johnson was no exception.

“We’re part of that movement,” Urban said.


More Than A Place To Rent A Bench

Incubator spaces for the biotech industry have existed in the commonwealth for nearly three decades. The Massachusetts Biomedical Initiatives, one of the first public-private partnerships focused on economic development, opened in 1985.
In addition to LabCentral, the MLSC gave a $4 million grant to the M2D2 facility in Lowell this year, over $500,000 to UMass Boston’s Venture Development Center, and $1.7 million to Northshore InnoVentures in Beverly. The latter was the first to receive capital funds from the Life Sciences Center in 2010.

At the time, the $50,000 in seed money was just enough to open the doors at the Beverly facility, said Martha Farmer, founder and CEO of Northshore InnoVentures. Although the North Shore already had a fair number of life sciences companies, Farmer said they weren’t connected to each other. Cobbling together another grant for several hundred thousand dollars from the federal government, Farmer said they were able to purchase lab equipment and then the space began to take off.

“That’s really when things grew,” Farmer said. “It’s unbelievable the difference for these companies that the lab equipment makes because these items cost a fortune.”

Like LabCentral, Northshore InnoVentures is more than a place to rent a bench at a lab; it’s a place to receive mentorship, to network with other emerging companies, and to build business skills, Farmer said. But the coworking facilities differ in the niches they offer the companies that chose to rent space from them.

Parker said LabCentral focuses exclusively on companies working in human health, whereas InnoVentures mixes clean tech and biotech companies together. In Worcester and Lowell, most emerging companies in incubators there focus on medical device manufacturing, with each area playing into its historical strengths.

“The folks who run these various incubators – we’re all in the same state of mind, which is that we want to help each other,” Parker said, adding it wasn’t so much about competition as it is about complimentary uses. “We are a very biology-focused space. So, we’re fully equipped for those people, whereas the incubators are not.”

Dr. Stephen McCarthy, director of M2D2 and a professor of plastics engineering at UMass Lowell, said the school has one of the few plastics engineering departments in the country, making it a magnet for medical device companies that rely on plastics.

Whereas LabCentral’s model focuses on getting the entrepreneurs inside to collaborate with each other, M2D2 offers private lab spaces, which 206 Ortho founder Jeff Dagostino said is critical for his company. Dagostino is looking to make a biodegradable polymer to support bone fractures as they heal.

“Intellectual property is critical here,” Dagostino said.

Like other incubators that help bring drugs to the market, McCarthy said M2D2’s mission is to take an idea for a medical device and commercialize it. Although there is a lot of funding from the National Institute of Health that comes to Massachusetts, medical device companies first need to have a product, create a reimbursement model and go through clinical trials, McCarthy said.

“That’s what we call the ‘Valley of Death,’” McCarthy said. “These inventors have to get through all of that before they get the money, so that’s what we do. We help them get through.”

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