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BIOTECHNOLOGY IN ST. LOUIS
STEPPING OUT OF BOSTON'S SHADOW?
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By Christine Imbs
Boston is consistently recognized as one of the nation’s top markets in the biotech industry. And according to Peter Brooke, St. Louis like Boston in the early 1970s is on the verge of taking off.
“There are lots of pockets of excellence in this country,” Brooke says. “I believe St. Louis is one of them. It’s in a similar place as Boston was in the mid- 60s, early 70s, just before it began to flourish. I believe
St. Louis is poised to be a big contender in the life sciences field.”
Brooke should know. He pioneered the emergence of Boston as a life sciences powerhouse and is considered the “dean of venture capital.” He founded two of the nation’s largest and most successful venture capital companies, TA Associates that is the largest U.S. private equity firms, and Advent International, one of the largest global private equity firms.
 Peter Brooke, chairman, Advent International |
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“St. Louis reminds me of what happened in Boston in 1970 because there was no formal venture capital community,” he says. “It was just a bunch of fellows, maybe a half dozen or so, doing a few deals here and there, scrambling for every dollar we could get from individual investors, friends or family.”
Brooke says it was also a very dismal period which didn’t help matters any. Vietnam, Watergate, a huge inflation and a recession kept spirits low. But toward the end of the 70s, the hard work of the venture
capitalist started to show real results.
“We came through the end of the period with results good enough for institutional investors to really make an entry into the field,” he says.
“I have the feeling that’s what the St. Louis region is going through now.”
Three years ago the St. Louis Regional Chamber and Growth Association took a delegation of 125 business and civic leaders to Boston to speak with the people at MIT, Harvard and other local sources about venture capital and the role it played in developing the life sciences in the Boston area. It was here they met Brooke.
“They asked me if I could suggest a way of jumpstarting the investing in the new health sciences ventures that were cropping up around Washington University,” he explains. “I told them I needed to spend some time in St. Louis before making any suggestions.”
His venture capital and private equity firm, Brooke Private Equity Advisors, contracted with St. Louis civic leaders to conduct a year-long study to determine St. Louis’ potential as a biotech center. What they found impressed them.
“We questioned a number of things,” he says. “Was the science and technology developed in St. Louis important enough for a new venture company activity to flourish? What was the technology transfer mechanism that existed in Washington University and the other research centers in St. Louis? And what was the state of the local incubators that would take this technology and bring it forward in the corporate form?
For the most part the answers to these questions made it clear that St. Louis was not only serious about becoming a major player in the biotech arena, but that it had great potential. The main problem Brooke says was that the local capital venture managers were not well funded and their connections with people in the rest of the country who could syndicate with them on deals were very weak.
“This is a major center, one that was being underserved by venture capitalists. We wanted to make sure it was properly capitalized and that it had the proper connections with people on the outside who could share in all the good science that is happening here, as well as in the analysis,” he explains. “We designed the Vectis Program to help.”
The Vectis Program is a unique “fund of funds” which links the St. Louis area venture capital managers with others on the east and west coasts who have had long term experience in funding the health sciences. It’s a collaborative system where they can share due diligence and analysis, and work together in syndicates.
“We ended up raising over $81 million for this fund,” Brooke says. “I believe this system will be used as a model in other major centers to bring science into use by other people in this country.”
Brooke points out that having this intense involvement from others outside the St. Louis area is going to have a lot to do with the
economic development here, and he feels Vectis is a key. This sentiment was also expressed during the InvestMidwest Venture Capital Forum held in St. Louis last year. A panel discussion with representatives from three venture capital firms participating in Vectis emphasized the importance of collaboration and syndication.
Panelist Gregory Johnson of Prolog Ventures, a local venture capital firm, said, “Early stage funds can muster enough capital to get companies started. It’s in the later stages where the gap is the greatest and this is where this collaboration and syndication really comes to bear. We need this outside critique so we can develop these companies in the best possible way.”
Panelist David Collier of CMEA Ventures in San Francisco indicated that local venture funds with access to the early stage
companies can syndicate more broadly with venture funds across the country creating broad relationships and providing an ongoing capital base for these companies to grow.
“From our perspective, being in San Francisco, we would be unlikely to fund a very early stage deal in a place like
St. Louis because of the high level of involvement we like to have with early stage companies. Just the travel time alone makes that difficult,” he commented. “But if we are working with venture capitalists who are here in St. Louis and who we know and trust, we are more likely to join in the syndicates for those kinds of deals.”
Another coastal participant, Jason Fisherman of Advent International in Boston, said, “We have always been geographically diverse, particularly in life sciences. The Vectis Program will enable us to access companies or pieces of companies that we can put together across geographies. And in life sciences, the customers are so international they are going to access the best regardless of where they are.”
“It’s a very competitive world we live in.
St. Louis isn’t going to be competing with just San Diego and Boston. It’s going to be competing against other areas of excellence throughout the country, including the Midwest. So it’s a race to get financing and a race to develop companies,” says Brooke.
The Branding of a Region's Emerging Industry Sector:
BioBeltsm — The Center of Plant and Life Sciences
According to a June 2002 national study by The Brookings Institution, the St. Louis metropolitan area ranks among the four most promising life sciences research centers in the U.S. (along with Houston, Ann Arbor/Detroit, and Chicago). In the late 1990s, however, when biotech and life sciences were just starting to emerge as the next big technological growth area, the St. Louis region’s strengths were largely well-kept secrets—even within the
St. Louis community itself. So, how did the region become known nationally and internationally as “BioBeltSM—the Center of Plant and Life Sciences?”
The Beginnings of the BioBelt
In 2000, the Battelle Memorial Institute completed an exhaustive study to review and catalog the St. Louis region’s plant and life sciences assets, to benchmark the region against others around the globe, and develop a strategy for this industry sector.
“The Battelle Strategy concluded that the St. Louis region boasted numerous world-class assets in the plant and life science field, including a strong research base and a large number of individuals, companies and institutions that had invested to help build the technology,” says Dick Fleming, president and CEO, St. Louis Regional Chamber and Growth Association. “The researchers’ first recommendation was that we immediately needed to develop a strong brand around the area’s many plant and life sciences resources—which at that time were relatively unknown.”
Anticipating that such a branding campaign for this cluster would be critical to bring “brains, bucks and business” to St. Louis, a marketing working group actually had formed earlier that year. The group was well on the way to presenting branding recommendations when Battelle confirmed that marketing was the first of five key actions the region must take to be successful.
The RCGA convened the so-called volunteer Marketing Task Force “Plant & Life Sciences Working Group” which brought together committed communications and marketing professionals representing the region’s leading plant and life sciences stakeholders with the goal of developing a strong regional brand to attract plant and life sciences talent, investors and enterprises to St. Louis.
“At the time, cities, states and regions throughout North America were competing to become known as the ‘Silicon Valley” of plant and life sciences. St. Louis needed to set ourselves apart and promote our region’s unique characteristics broadly,” says Cathy Dunkin, president and CEO of Standing Partnership and working group member.
“The Midwest was already known as the CornBelt. We wanted to capitalize on the familiarity of this name, while shifting the focus to the region’s biotech assets. In all, the group considered 40 different names, 25 logo concepts and six taglines,” says Nila Paradowski, principal, Paradowski Creative and member of the Plant & Life Sciences Working Group.
Taking a Place on the World Stage
“The St. Louis region already had a number of plant and life sciences resources in place and was starting to build momentum, but articulating that movement and giving it an identity made it a reality,” says Kathryn Kissam, marketing and brand consultant to leading U.S. companies and a member of what came to be known as the “BioBelt Marketing Task Force.”
The development of the BioBelt brand rallied the region around plant and life sciences and has been an important catalyst for the area’s remarkable growth in this industry and
current position as one of the world’s leading plant and life sciences centers. |
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