New healthcare businesses get a funding boost from state programs
States should be natural incubators for startup companies, but some states take that responsibility more seriously than others.
California, for example, has multiple sources of small business funding – its California Business Portal and California Financial Assistance routinely provide funding to statewide small businesses.
Texas, Washington, Louisiana and Ohio are also aggressive about finding public money for new businesses.
Those states are playing the funding game smartly. Savvy entrepreneurs know that federal grant money for new startups is actually quite scarce, with plenty of action on the state level.
In the private sector, the news on capital investment is a mixed bag. According to the National Venture Capital Association and PriceWaterhouseCoopers, startup investments for the first quarter of 2011 were up 14 percent, to $5.9 billion, from the same period in 2010. But the number of U.S. startups garnering funding capital actually fell by 7 percent, to only 736 businesses.
(The biotechnology and medical device sector, by the way, led all sectors in receiving venture money – the life sciences sector saw a 16 percent rise in funding for the January-to-March period.)
When private venture capital companies are funding fewer companies (especially fewer brand new companies, as the NVCA report points out), it’s the states that are first in line to fill the breach. One state, in particular, is getting the job done on that front – Massachusetts.
The Bay State is already chock-full of great colleges and universities that have direct entrepreneurship programs; Bentley and Brandeis both come immediately to mind.
But the state has developed startup-friendly organizations of its own. Exhibit “A” is MassDevelopment, the state’s finance and development agency. According to the group’s web site, MassDevelopment “works with businesses, nonprofits, financial institutions, and communities to stimulate economic growth across the Commonwealth.”
It’s got a good track record of supporting state startups. During FY2010, MassDevelopment financed or managed 238 projects in 104 communities across the state generating investment of nearly $1.4 billion, the group adds.
In the healthcare sector, MassDevelopment recently provided a $1.4 million loan to ConforMIS Inc., a Burlington, Mass.-based medical device company that specializes in new models of orthopedic implants. The technology could be a big boost to patients with cranky knees. ConforMIS creates computed tomography scans and proprietary computer-aided design technology to create customized knee implant solutions for patients.
The company recently was granted 510(k) clearance from the U.S. Food and Drug Administration for its signature product -- iTotal CR -- the only patient-specific total knee implant cleared for sale in the United States.
ConforMIS says it will use the money to buy fabrication equipment to beef up its manufacturing operations.
No doubt, MassDevelopment is bullish on companies like ConforMIS, and wants to keep the pipeline flowing for statewide companies just like it. “With this new technology, ConforMIS will be able to provide knee replacements to those who are underserved by current designs,” said MassDevelopment President and CEO Marty Jones. “We see this project as a triple play: boosting production, creating jobs, and serving the health needs of the Commonwealth.”
Those are words to live by for every state in America. With a brutal economy, and fewer opportunities for private venture funding, states like Massachusetts aren’t taking anything for granted.
Bay State entrepreneurs can relate to that.