Massachusetts’ Big Bet on Biotech Pays Off

Last year the tenants of a single glass-and-steel building in Cambridge, Mass., raised $201 million in seed stage venture capital funding, more than the entire Swiss life-science and biotech industry. The building houses LabCentral, an incubator for biotech startups that opened in November 2013, renting space to would-be entrepreneurs. LabCentral was the brainchild of a venture capitalist named Peter Parker, but he owes its existence to Massachusetts taxpayers, who fronted $5 million for the project. “That was most of the buildout and the big sunk cost that no investor would have ever put up,” he says.

The investment was made under the state’s 2008 Life Sciences Act, which authorized $1 billion in investments, grants, loans, and tax breaks over 10 years to give the local biotech industry a lift over rivals in California. The incentive package has paid off for Massachusetts, which won a third of all U.S. seed stage funding for biotech from 2009 to 2013—more than $761 million, according to the MoneyTree Report, a joint study produced by PwC and the National Venture Capital Association. Nine of the world’s 10 biggest drug companies have opened offices or research and development labs in the state over the past few years. And R&D jobs in the industry have grown more than 21 percent over the same period, according to the Massachusetts Biotechnology Council, nearly three times the U.S. rate.