The Most Promising US Cities for Biotech Startups

Biotech Industry Climate

Biotech is science-based, focusing on the manipulation of living organisms to create commercial products. This industry tries to improve the overall health of individuals’ lives, but it also strives for discoveries and developments.

Although biotech is nothing new, the last decade or so has seen strides forward like never before. From an array of new drug trials to transgenic crops peppered across the globe, this industry is thriving. Naturally, this progressive climate is both attractive and inviting to startups.

Recently, 8,832 funding rounds — Seed, Series A, Series B, Grant, Series C — raised $80.9 billion for many of the 3,831 fresher faces in the industry. Some of the most recent funding activity includes companies, such as:

• Immunai – $20M
• Nautilus Biotechnology – $76M
• Q32 Bio – $46M
• Kriya Therapeutics – $80.5M
• Zentera Therapeutics – $20M
• Benchling – $50M
• AbCellera Biologics – $105M
• Ginkgo Bioworks – $70M

It’s safe to say that the biotech industry is undeniably a go-to for founders, especially with venture capital (VC) pouring into the market like it is. But starting and gaining momentum is not always a walk on Easy Street for biotech startups.

Startup Costs to Consider

Like many newbies, biotech startups face plenty of challenges during takeoff. Plus, biotech doesn’t typically inhabit the “cheap” part of town, either. Whether it’s one coast or the other, starting a company in a biotech hotspot can be incredibly costly. Consider the following startup costs:

• Office space
• Utilities
• Equipment and supplies
• Inventory
• Insurance, license, and permit fees
• Payroll expenses
• Salaries or wages
• Advertising and marketing

For many biotech startups, the trade-off for launching a company in a more expensive part of the world is that these cities are unrivaled when it comes to biotech resources. What makes the following cities more promising than others is mostly that the biotech industry thrives in these parts of the world. And for a good reason, too!

Accelerators, incubators, funds, colleges, and other programs all help to support the growth in the space. For example, AstraZeneca, located in Massachusetts, is one of the most significant incubators in biotech. Influential accelerators, such as Illumina, which focuses on gene cell sequencing, has facilities in the San Francisco Bay Area.

US Cities for Biotech Startups

Boston (and Cambridge), San Francisco, and San Diego top the list as the most promising US cities for biotech startups. Though the Midwest contributes to the industry, the coastal towns mentioned lead the way, and here’s why.

Boston

Boston, including Cambridge, is a powerhouse in the biotech industry. Many of the leading biotech companies call it home, making the intersection of Cambridge’s Ames and Main Street, Kendall Square, a magnet for startups in the space. With new students arriving at MIT and Harvard each year, the overall “magic” of the area spur on inspiration and dedication.

This intense “BioBoom” started an entire century ago, though it’s picked up the pace in the past decade or so. Massachusetts focuses mostly on pharmaceutical research and development (R&D). In 2019 alone, over 22K new trials and drugs were underway. Some of the most successful companies use Boston as a home base, including:

• Cerevel Therapeutics
• Anthos Therapeutics
• Cyclerion Therapeutics
• Thrive Early Detection
• Ribbon Therapeutics
• Verve Therapeutics
• Motif FoodWorks
• Talaris Therapeutics

San Francisco

Massachusetts enjoys honing in on R&D, but California (specifically Silicon Valley) tends to adopt a broader approach to tech and biotech, earning it the name “Biotech Bay.” According to PwC’s Heathcare MoneyTree report for 2020 Q1, “Silicon Valley raised $2.5B through 45 deals and is the leading region this quarter in terms of dollars raised. There were nine mega-rounds in Silicon Valley.”

According to the 2019 California Life Sciences Industry Report, the area’s 3,418 biotech companies employ 96,574 life sciences workers averaging a $151,076 annual wage. Biotech Bay strives for cutting edge and innovative technology, making it the perfect landing place for biotech founders to set up camp. Here are a few prominent biotech companies in the SF Bay Area:

• Bayer Health Care
• Novartis
• Amgen
• Genentech
• Celera
• Nektar Therapeutics
• Gilead Sciences
• Onyx Pharmaceuticals

San Diego

It’s not only Northern California making its mark on the biotech industry. Southern California, specifically San Diego, serves as a massive hub for life sciences companies, too. This area of California is known as Biotech Beach.

It’s another hotbed for biotech, pharmaceutical, and medical device companies, such as:

• Argonaut
• Bioduro
• Neurana Pharmaceuticals
• Freudenberg Medical
• Irisis
• ANDbio
• Access Scientific
• Acadia Pharmaceuticals

Amplyx Pharmaceuticals in San Diego announced raising $90M in a Series C funding round to help develop drugs for the immunosuppressed. Carlsbad’s ChromoCode aims to pursue low-cost coronavirus testing with its $38M in third-round venture capital.

Noteworthy Midwest

Although the coasts are undeniably the best places to be in the biotech industry, many US fly-over states contribute to the space. Consider the Great Lakes area, for example. It’s geographically centered between the two coasts, and it’s ripe with biotech success.

Compared to the East Coast or the West Coast, the Midwest can undoubtedly hold its own. The Midwest zone stretches across nine states, from Iowa to Ohio and Minnesota to Kansas. In this area are many life sciences companies and research universities focused on pharmaceuticals, medical devices, and agriculture.

• C2N Diagnostics (Saint Louis, MO)
• International Center for Biotechnology (Horeb, WI)
• Medtronic (Fridley, MN)
• Novum Pharma (Chicago, IL)
• Lynx Dx (Northville, MI)
• Centerline Biomedical (Cleveland, OH)
• Athersys (Cleveland, OH)
• CoverCress Inc. (Saint Louis, MO)

With so much happening in the biotech industry, the cities mentioned are undeniably the ones keeping its pulse. It only makes sense that many of these areas serve as magnets for biotech startups.

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