New York’s Life Sciences Industry Attracts Record Amounts of VC Funding
Last year, New York’s life sciences industry received 30 cents of venture capital (VC) funding for every dollar of National Institutes of Health (NIH) funding, up sixfold since 2010, according to a recent analysis by the Partnership’s research team. New York’s growth outpaced the nation’s as well as California’s and Massachusetts’. These trends were primarily driven by VC growth, since NIH dollars have remained relatively constant.
The ratio of VC investment to NIH dollars is an important indicator of the private sector’s interest in investing in publicly funded research within the state. Previously, biomedical research conducted in New York led to minimal business activity. Discoveries at leading medical and academic institutions were rarely commercialized locally and instead led to business creation in competitor markets, such as Massachusetts, New Jersey and California. The improvement in New York’s ratio of VC funding to NIH dollars points to a shifting paradigm where local discoveries are increasingly being spun out into businesses and creating new jobs and tax revenues to benefit the state’s economy.
The rapid acceleration of private activity in New York’s life sciences sector comes in response to public funding from Gov. Andrew Cuomo and New York City Mayor Bill de Blasio, who collectively committed $1.2 billion to the industry in December 2016. Public sector investments in R&D and Excelsior state tax credits, in incubator facilities for early-stage life science companies (JLABS and NYBiolabs@NYU) and in a life sciences internship program are starting to bear fruit. The private real estate community is stepping up as well with projects such as Alexandria Center’s third tower and LaunchLabs; Taconic and Silverstein Properties’ Hudson Research Center; Janus’ Mink Building in Harlem; and King Street Properties’ biotech center in Long Island City. Twelve companies have each received venture investment in excess of $20 million over the last 18 months — including Kallyope ($87M), Prevail Therapeutics ($75M), HiberCell ($61M), Quentis ($48M), and Rgenix ($40M).
With renewed attention from the public sector, New York’s life sciences cluster is now leveraging the strength of its world-class academic research centers, biomedical talent and investors into commercial activity.
There is still work to be done, however. New York trails Massachusetts and California, where the private sector invested over $2 for every $1 of NIH funding. New York also trails the national average, which at 74 cents of VC dollars to NIH funding is 2.5 times the New York level.
The good news is that New York is still attracting an increasing share of NIH funding. Importantly, both the state and city also continue to make strategic investments to support the growth of this vital industry for New York. Both venture funders and entrepreneurs should feel confident that the environment for launching a life sciences company in New York has never been as supportive as it is today.
