REPORTER’S NOTEBOOK: Life sciences Firms Grapple with Finding VC Funds, Remaining in State
Tuesday, February 7, 2017
Posted by: Kate Oesterle
If Mark Gurney can’t find the capital he needs in Michigan, his drug development firm is poised to look for it elsewhere.
Bringing aboard additional out-of-state investors could mean that Tetra Discovery Partners LLC has to move to follow the money, and that’s a decision Gurney is willing to make.
“Our challenge going forward is keeping our company in West Michigan,” Gurney said during a recent panel discussion at the annual MichBio Expo held in Kalamazoo.
His comments provide further voice to an issue facing Michigan-bred life sciences firms that formed years ago, progressed with early-stage venture capital, and now require larger rounds as they move into later stages of development.
While venture capital has made great strides in Michigan over the last decade, companies that need large amounts of capital generally have to go out of state for deep-pocketed investors that can fund later rounds.
That could result in a company having to relocate closer to a lead investor who may not view Michigan as the place to foster the next great innovation in the biotech industry or who still views the Midwest as a flyover region.
Gurney recalled running into that thinking once while sitting at a meeting with partners at a Boston-based venture capital fund.
“One of them turned to me and said, ‘Well, how do you get here?’ I told him I fly,” Gurney said during the MichBio panel discussion, drawing a few laughs from attendees. “There’s unfortunately a large vacuuming sound with the financing on the east or west coasts, and so it’s a challenge. I hope we can stay here. I hope we can find the investors and we can convince them Michigan is the place to be, because we’ll spend their money carefully and we have a high ROI being based here.”
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