Wednesday, March 16, 2011

It took ten years, and that was just to get started

Adopt the pace of nature: her secret is patience. Ralph Waldo Emerson

It seems like a great idea, bring together a few biomedical research universities with entrepreneurs and investors, provide them with laboratories and offices, maybe a little government backed risk capital, position a person who can speak all of their languages to create a fuzzy interface....and poof, you have a biotech industry!

As simple as that, it's a proven formula from Boston to Qatar. Just don't expect it to happen in a few years or even a decade.

Yesterday I had the pleasure of touring the yet to be opened New Orleans Bioinnovation Center. Located just a short walk from that more famous institution, Bourbon Street, the Bioinnovation Center has about 60,000 square feet of laboratories, offices and conference facilities.

As Aaron Miscenich, president of the center, walks me through the building he describes its purpose. It is the physical structure which ties together entrepreneurs, angel investors, venture capitalists, university researchers and their ever vigilant tech transfer offices, non-profit assistance ranging from finance to business planning. Doing so will result in more start-up biotech companies and growth of a high paying industry sector for New Orleans.

It's all text book. Travel to Boston, Pittsburgh, Philadelphia, San Diego or dozens of other cities around the world and you will find the same thing. You will also find that it has worked.

So it's a proven model, but it took 10 years (maybe more) from the initial planning phase to the point where the building is almost open for operation.

Why so long? no, it is not because New Orleans is living up to any sort of undeserved reputation. You'll find that it takes just as long no matter where it's done.

It isn't that $50 million plus or minus $10 million to build the facility is a lot of money. Sure, it's a lot of money if it is in my bank account, but for a city the size of New Orleans? A new football stadium costs 10x that!

I didn't ask Aaron for all the details but I'm guessing his story is not dissimilar to my experience. First, there's the feasibility study...or actually, the raising the $100k+ from the Economic Development Administration (EDA) to pay for the study and convincing someone local to pay the matching funds. Then there's the bid process for the feasibility study; doing the study; reporting on the study; obtaining public comment on the study. Lots of studying just to say, sure the idea could work.

Once you have a study you can go back to the EDA and ask for planning money. And find someone local to match that money (with non federal funds!). After a few years of studying and planning you'd be ready to raise some money to actually design the facility and hopefully even build it.

But it's been a few years now and the people who originally had the idea are off doing something else. The new people involved decide the project should occur in a different place or with a different purpose. So you make due with what you have, spend a lot of time modifying it to meet the new leadership interests and another year slips away.

Now, you can finally raise $50 million! But from where. If you follow the government financing path you will find that there is no established program (federal or state). So you are headed down the earmark process. Put down two years at least before you see that cash and can actually pay an architect.

Of course, you could do more traditional financing, but banks aren't so wild about your business plan to lease space to companies with no financial history and that are likely losing money. Even if you could pull it off, the cost of capital will be high compared to government funding where the capital is, well, free.

Add in a few years to actually build the could BE different sure - if you can wait a few decades!

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