Why America’s Best Academic
Research is Landlocked
The first image depicts the National Institutes of Health and National Science Foundation grants awarded to academic researchers throughout the U.S., while the second image depicts the concentration of venture capitalists with a history of investing in biomedical startups. (Sources: National Institutes of Health; Pitchbook; Research Bridge Partners model and analysis.)
Not only do America’s research universities have an unequaled track record of innovation, their best technology is dispersed throughout the country. Lifesaving breakthroughs ranging from the polio vaccine and the pacemaker to, more recently, chemotherapy treatments like Cisplatin and the world’s most widely prescribed blood thinner, Coumadin, have originated at mid-continent research universities.
The problem is that mid-continent innovators and their labs are geographically removed from the commercialization resources – the venture capital, professional service firms and scaling business talent, as well as the velocity of the deal making – concentrated in the San Francisco and Boston areas.
This geographic misalignment results in far higher search and transaction costs for venture capital firms, which is a disincentive for traditional capital to even take a close look. Even if venture capital identifies a highly promising opportunity, the spinout will likely be slower in creating economic value and societal impact than its rivals in the Bay Area or Boston. Even preeminent innovators at mid-continent research universities are at a significant disadvantage.
Compounding their disadvantage are recent changes in the venture capital industry. Many large venture capital firms have now created lab-to-market systems to progress ideas towards financial liquidity. However, these “walled gardens” can be difficult for midcontinent principal investigators to access, as they tend to put a premium on institutional brand and geographical proximity. Even if an innovator accesses one of these vertically integrated systems, she will have to relinquish management of her early-stage science to strangers whose approach to innovation and lab culture can be quite different, along with an outsized equity stake in the spinout.
The unfortunate result of these factors is that a large percentage of America’s best academic research lies fallow and innovations capable of saving or enhancing human lives, while generating significant economic impact, never reach the public or, at best, take years longer to do so.