Is it time to think differently about the “Valley of Death”
? The gap in capital and talent that prevents so many companies from successfully translating their promising medical technology from research to mass market success?
I think so, and here is why
In the last month, we at MedTech-IQ
have experienced a number of illuminating encounters. On the U.S. West Coast, we spoke to numerous venture capitalists, investors, corporate executives and CEOs in and around the excellent annual Larta Institute Life Science Venture Forum in San Jose, California; heart of the “Silicon Valley” venture capital community.
Earlier, on the East Coast, we spoke with over 50 researchers, entrepreneurs and government program managers at the superb annual U.S. Army, Telemedicine and Advanced Technology Research Center (TATRC) Technology Expo at Fort Detrick, Maryland. Perhaps, the most impressive display of emerging telemedicine, medical robotics, health information, medical device and training technologies under one roof.
Over the course of the past month, we have also met with the life science technology transfer officers of the largest U.S. recipient of medical research funds, with the Center of Excellence in Remote Medical Care to Underserved Areas to discuss rural outreach programs, the heads of various incubators and regional technology councils, and have talked to countless CEOs and investors in early stage medical firms.
Here is what we found.
Our colleagues on the West Coast speak the language of venture capital ... Terms Sheets, Company Valuations, Series A, B & C funding rounds, Investor Syndicates, and "Dilutive" Risk Capital investments. East Coast colleagues speak the language of government ... Stimulus/ARRA programs, RFAs (Requests For Applications), NOFAs (Notifications of Funding Availability), Proposals, SBIR, STTR, Phase 1/Phase 2, and “Non-Dilutive” government funding. See link to MedTech-IQ search results for "Stimulus" funding: http://medtechiq.ning.com/main/search/search?q=stimulus+funding
Despite these language difficulties, the East Coast and West Coast medical innovator, face a set of inter-related problems. West Coast innovators claim the venture capital model is 'broken”. It doesn't invest appropriately in early stage companies; where the needs, opportunities, risks & rewards are the greatest.
East Coast innovators contend with the opposite problem. Particularly, since the addition of billions of dollars in "Stimulus" funding, one can argue that there is sufficient government money available to fund research thru technology prototyping. But, there is almost no East Coast money for mass market commercialization and scale-up; the precise place in the developmental life cycle where many venture capitalists would like to invest their money.
What we need are “Bi-Lingual” boundary spanners who are fluent in both languages ... East Coast “Government” funding talk and West Coast “Venture” investment speak.
Who are these experts?
thinks we have a number of members who meet these qualifications. In the continuing quest to bring bring you the 3Cs of "Content, Community & Collaboration" here are a few of the members we think are beginning to bridge the gap between later stage West Coast "Venture Capital" and East Coast early stage research & development "Funding":
and Leigh Jerome
; leading scholars on the intersection of academia, industry and government.
, Judy Hsieh
, Paul Huleatt
, Lance Manning
; Rohit and Judy run the NIH (National Institutes of Health) Commercialization Assistance Program (CAP), Paul does similar work with NSF (National Science Foundation), while Lance has done similar work with DARPA (Defense Advanced Research Projects Agency)
, Jill Sorenson
, Barry Datlof,
; Ron runs the Technology Transfer operation at TATRC, a dynamic military medical R&D Center managing over $300m in annual investments, Jill and Barry have been leaders in how government life science programs can use social networking and IT to improve academic, industry, government collaboration.
, Jonathan Rosen
, ; Tim runs the Center for Commercialization of Advanced Technolgy (CCAT) out of the Cal State, San Bernadino, Office of Technology Transfer & Commercialization (OTTC), Jonathan is Director, ITEC, the Institute for Technology Entrepreneurship & Commercialization, a Boston University center specializing in international entrepreneurship, commercialization, Translational Research, Global Health and medical technologies.
, Victor Hwang
; Dan runs CFI (the Capital Formation Institute), a non-profit specializing in assisting early stage companies raise funds, Victor is Managing Director of T2 Capital, a venture capital fund specializing in early stage funding of government funded enterprises.
, Monica Alfaro Welling
; Mike runs NextTechs, an innovative technology exchange for identifying and transacting corporate technology acquisition, Monica runs, Strategic Links, a bio-pharmaceutical development firm with representation on the West and East Coasts.
& Gary Capistrant
; Probably the top two experts in the country on the impact of "Stimulus" funding on telehealth, eHealth and remote monitoring/home health.
In the near term, we believe sustainable competitive advantage will accrue to those who skillfully mitigate developmental risk by leveraging 'Non-Dilutive" government funding to conduct scientific discovery, applied research and advanced technology development, and then can seamlessly shift to "Dilutive" private sector venture capital to aggressively complete product development, validation and mass market scale-up. This will almost certainly require partnerships that span the two coastal cultures.
Everyone should learn to speak a second language! Your comments will be appreciated.