CHANDLER, Ariz.--(BUSINESS WIRE)--The Arizona Bioindustry Association (AZBio) today announced that it has been awarded a $299,750 grant from the U.S. Economic Development Administration’s (EDA) 2018 Regional Innovation Strategies (RIS) program competition to support the creation of a sustainable seed fund for life science innovation in Arizona. In addition to the federal contribution to the project, AZBio and its partners will provide matching support in excess of $500,000 over the three-year term of the project. These resources support the seed fund capital campaign, structure and operations as well as programs designed to help Arizona life science companies prepare for the investment process. Neither the federal funds or the matching funds may be used to capitalize the fund itself or for direct investment into individual companies.
The Arizona Bioscience Cluster Sustainable Seed Fund Project has been designed to help close the funding gap for early-stage life science and healthcare technology companies in the region’s bioscience cluster by creating a new and sustained flow of equity-based funding in a state that has lacked available capital from local institutional investors since 2006. The project will also provide resources and technical assistance to help prepare these companies for their initial funding process as well the follow-on funding they will likely need in the future. The availability of additional, local capital through the new seed fund will enable select companies to achieve milestones and fuel their growth. These companies in turn will enhance the long-term economic vitality of the region by attracting additional private investment to the region, creating and sustaining high-paying jobs, and furthering the entrepreneurial culture arising from the cluster’s growth. Five years after the end of the grant, AZBio expects that the seed fund will have attracted $500 million in additional investment and supported 200 high quality, 21st century jobs.
Arizona is one of the fastest growing bioscience states and one of only 15 states that increased their total employment base by more than 5,000 in the period from 2001 – 2016. While the perception of industry strength through job growth is important, having the assets to support the continuum from discovery to development to delivery is also an essential component. These include university infrastructure, academic research talent, contract research and contract manufacturing resources, clinical partners, an industry talent pool spanning from entry to middle and senior management, and locally based venture capital firms to facilitate investment and syndication. While Arizona has made noteworthy progress in most of these areas, the state has failed to attract or build a significant structure for either seed or later stage investment at life science scale.
“Resolving this challenge is a key focus of the Arizona Bioscience Roadmap Steering Committee and AZBio’s Board of Directors,” stated Joan Koerber-Walker who serves as president and CEO of AZBio and on the Board of Trustees of the Healthcare Impact Foundation. “Creating a mechanism for a sustained flow of early-stage capital for life science innovation and a pipeline of investment-ready companies is the purpose of Arizona Bioscience Cluster Sustainable Seed Fund Project.”
The project design is the result of a multi-year global benchmarking effort led by the Stetson Family Office (SFO) and AZBio. The net result was the observation that while the traditional seed fund model of “raise and deploy” provides significant stimulus to the innovation cluster it supports, once the funds have been fully invested and no new investment dollars are available, the stimulus impact wanes. To counter this effect, AZBio, working with SFO, developed an endowment-based model to provide a sustained stream of early-stage funding that could span generations of innovation. The result was the creation of the Healthcare Impact Foundation (HCIF) by the Stetson Family Office. As a 5013c public charity, HCIF will support a portfolio of endowments that will invest in early-stage life science innovation in communities with high growth potential as well as focused endowments to address global health challenges including, but not limited to, cancer, diabetes, and Alzheimer’s disease. AZBio is working with SFO to build the first of the endowments under the HCIF umbrella, Healthcare Impact Foundation-Arizona or AZ-HCIF.
Once it reaches its endowment goal of $200 million, AZ-HCIF can be expected to yield $10 million or more in available early stage capital for Arizona life science innovator companies and other support for the Arizona life science ecosystem every year. The project also includes additional fundraising goals for direct impact funds that can accelerate the process while the endowment builds and matures.
“This project will help accelerate momentum across the cluster by complementing the recent EDA support that has helped to build best-in class incubators,” stated Russ Yelton, chair of the AZ-HCIF board of trustees. “The availability of additional, local capital will enable select companies to achieve milestones and fuel their growth; these companies in turn will enhance the long-term economic vitality of the region by attracting additional private investment as they grow.”
The Arizona Bioscience Cluster Sustainable Seed Fund Project was developed by AZBio and supported by AZBio’s Board of Directors, Stetson Family Office, the Flinn Foundation, leaders from Arizona’s public and private universities, members of the life science and business sectors, the Arizona Commerce Authority, and the cities of Flagstaff, Peoria, Phoenix, and Tempe, Arizona.
“A strength of Arizona’s bioindustry is the way people from across the state come together to achieve a common goal,” stated Kristen Swingle, chair of the AZBio Board of Directors. “We are deeply grateful to the EDA for providing resources that can help the Arizona Bioscience Cluster Sustainable Seed Fund Project move forward faster and look forward to working with all of our partners to achieve its aggressive and impactful goals.”
The Office of Innovation and Entrepreneurship (OIE), housed within the U.S. Department of Commerce’s Economic Development Administration (EDA), leads the Regional Innovation Strategies Program to spur innovation capacity-building activities in regions across the nation. The program is authorized through the America COMPETES reauthorization Act of 2010, and has received dedicated appropriations since FY2014.
About the U.S. Economic Development Administration (www.eda.gov)
The mission of the U.S. Economic Development Administration (EDA) is to lead the federal economic development agenda by promoting competitiveness and preparing the nation's regions for growth and success in the worldwide economy. An agency within the U.S. Department of Commerce, EDA makes investments in economically distressed communities in order to create jobs for U.S. workers, promote American innovation, and accelerate long-term sustainable economic growth.
For 15 years, the Arizona Bioindustry Association (AZBio) has supported life science innovation and life science innovators in Arizona. A key component in Arizona’s life science ecosystem, AZBio is the only statewide organization exclusively focused on Arizona’s bioscience industry. AZBio membership includes patient advocacy organizations, life science innovators, educators, healthcare partners and leading business organizations. AZBio is the statewide affiliate of the Biotechnology Innovation Organization (BIO) and works in partnership with AdvaMed, MDMA, and PhRMA to advance innovation and to ensure that the value delivered from life-changing and life-saving innovation benefits people in Arizona and around the world.
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