Changing Dynamics in Incubators and Outsourcing
Guest Blog by Julia Varady and Gordon Carlson, Rilas Technologies, Inc.
The pace of innovation in the pharma and biotech space is accelerating, driven largely by the success of small startup companies. For these startup companies, “extending the runway” is an existential driver to make the most effective use of limited time and funding, thereby increasing the chance of success of company and therapeutic platform alike. Incubator spaces have provided exceptionally effective pathways for the lean startup to step into a fully functioning lab space and be productive on Day 1, which is increasingly becoming the expected norm. Indeed, Massachusetts alone has seen the opening of dozens of incubator lab spaces in the last 10 years, representing more than 12 million square feet of operational lab space and billions of dollars of innovation investment, resulting in dozens of novel treatments from either new companies going public on their own or acquisition by larger entities.
The role of venture capital in the life sciences sphere has likewise shifted. It was once rare to see VC firms working an active support role in their biotech investments, entrusting much of the decision-making authority with the funded companies to pursue independently. Fledgling companies, whose success or failure is as much related to company leadership as the soundness of the science, would then be tasked with everything from operational matters to business strategy. In a conceptual shift, VC firms are increasingly providing startups with a breadth of support and consultative resources to help extend the runway, some even building entire incubator spaces to serve their portfolio companies. These services aim to drive faster, more effective decision making by increasing access to good data while minimizing the time to access. As rates of funding have dropped from their peak in March of 2021, these novel support investments have become effective ways to maximize ROI potential for scarcer funding. In some cases, access to support services like incubators can result in 88% success rates for startups, in an ecosystem that sees an often-quoted 90% failure rate.
Despite- or possibly reinforced by- this changing landscape, lean startups continue to rely on contract research organizations (CROs) as a vital source of critical materials, data, and specialized expertise. As productivity in many industries around the world has gone increasingly virtual, the need to work with physical material simply cannot be replaced in the life sciences. This work is frequently outsourced overseas, primarily in the name of cost savings, a perceived value that is susceptible to significant risk. Reoccurring global conflict and supply chain disruptions within the last few years have become familiar strains on reliable access to outsourced data and materials, adding yet another layer of uncertainty on top of conventional concerns like lead times, work prioritization competition, and IP security. Further, outsourced deliverables can seemingly come from a black box. A library of compounds or a dataset, disconnected from its expert source, can be incomplete without the method that led to the result or know-how insight that grew from the process. For some, this may be sufficient. For others, lacking this full picture might lead to future developmental issues. All uncertainties result in lost time; the only resource startup companies cannot afford to squander.
Overcoming compounded challenges of diminishing access to funding, uncertainty with external outsourcing of deliverables, and timelines with increasingly narrow margins requires innovative solutions, and the life sciences industry has responded. One such solution is localizing the combined expertise and support capability of a CRO with a full-service incubator space within one facility, such as the Rilas Technologies Incubator in Woburn, MA. Just as the irreplaceable value of in-person interactions is being recognized in the wake of virtual meeting takeover, life sciences leaders are recognizing the risk of similar insight gaps from purely virtual scientific relationships. Combining robust support services that can collaborate directly with the material needs of startups, and their backers, will be essential in the coming years as the tightening of the labor and finance markets will squeeze startups to produce more impactful results faster. Avoiding unnecessary loss of time and money will always remain a top priority for startups, and mitigating this risk requires opening more direct lines of connection. Extending the runway for startups is synonymous with sustaining the biotech/pharma industry as a whole and, ultimately, its long-term mission to improve the global human condition.
Find out more about the new Rilas Incubator here: https://rilastech.com/incubator/
About
Gordon Carlson
VP of Business Development, Rilas Technologies
Gordon Carlson serves as the Vice President of Business Development at Rilas Technologies. He most recently led a team managing bioanalytical instrumentation and lab operations at LabCentral, an incubator space in Kendall Square, where he supported the daily scientific, ideational, and culinary discourse needs of over 150 startup companies and sponsoring vendor partners. His previous experience includes global business development, sales, and field service at Waters and Biotage, line cook at Journeyman Restaurant, as well as bench work in organic and peptide chemistry at Ipsen and Aileron.
Gordon earned his B.S. in Chemistry, with minors in Biology and Philosophy, from Union College and his M.S. in Engineering Management from Tufts University. He currently resides in Somerville, Massachusetts with his wife and two sons.
Julia Varady
Director of Communications, Rilas Technologies
Julia Varady is the Director of Communications at Rilas Technologies. She began working at Rilas in 2014 and has since been part of the team helping to grow and expand the company and its offerings. Outside of the office, Julia rides and takes care of horses and in her free time enjoys painting and drawing.
Julia received her BFA from Massachusetts College of Art and Design, and lives and works in Ann Arbor, Michigan.
