6 ms·

The article sort of buries the real reason for this: the large amounts of biotech VC funding. Boston is the world-center of biotech startups and VC, and biotech

The article sort of buries the real reason for this: the large amounts of biotech VC funding. Boston is the world-center of biotech startups and VC, and biotech VC funding is on pace to be $15-20B this year. As recently as 2013 __total__ VC activity was just $29B The amount of money being invested (and made) in biotech today, and the level of technological advancement in the field, is disproportionately higher than mainstream awareness of the field

biohax2015 8y ago
Makes me regret abandoning biotech/computational biology for the safer shores of software engineering :(
- simmanian 8y ago
  I would think software engineers are still very much needed in almost every biotech startup :)
  - aaavl2821 8y ago
    There are some that rely very heavily on software engineers but most don't, although that is starting to change I think. The biotech startups that the tech press covers represent a tiny fraction (under 10%) of biotech startup activity. The separation between the biotech and tech startup worlds is almost at a global maximum. It used to be that major tech VCs were also major biotech VCs. Starting about 5-10 years ago tech VCs gave up on biotech. Coincidentally that's about when all the exciting stuff started happening Pretty much all of the big biotech exits are mostly not even covered in the tech press (with the exception of stemcentrx, unity and maybe a few others)
    - ghaff 8y ago
      AI/ML seem to be leading to some new companies that have a big software component. But in general the “tech” crowd doesn’t think much about pharmaceutical, biotech, personalized medicine etc.
    - nostrademons 8y ago
      Biotech requires several very different foundational assumptions than consumer-tech. You can't "move fast and break things" in biotech. You have to budget a lot more for R&D, and you have to be okay with dozens of experiments outright not working and not leading to anything useful. Having world-class scientific talent on your team is actually really important, while it's overkill for most software. Your iterations are usually about whether the science works, not whether the market will accept it. Technical risk dominates market risk. There's a large regulatory barrier to even getting a product to market. Your per-unit profits are often significantly higher than in consumer software, but your per-unit costs are higher, and your unit volumes are much lower. [source: I'm in consumer tech and my brother-in-law is a cancer researcher.] A VC's core competency is typically in knowing & applying the core industry dynamics to their investments, so if the core industry dynamics are different, it makes sense that VCs will eventually specialize in subjects that they actually know something about. Trying to apply consumer software "best practices" to biotech will get people killed and you sent to prison.
      - aaavl2821 8y ago
        I agree, i think the biggest issue right now with tech VCs starting to get back into biotech is that they don't appreciate the technical / scientific risk, or think they can magic the risk away with AI. The tech VCs are renewing their interest bc they've seen that its possible to get $10B+ exits in under 5 years in biotech (KITE and JUNO got to $10B valuations faster than I think dropbox, snapchat and twitter), but i think some of them misunderstand the risk, as you mention, and will get burned Cycles times are costly / more expensive, and companies usually only get a handful of chances to get it right. And it's too expensive to try to manage this risk through diversification alone -- cost of failure is too high. That's why biotech VCs spend so much time on diligence -- mostly scientific diligence -- compared to tech counterparts
      - mwcampbell 8y ago
        Somewhere in the multiverse, all software is developed with the care that biotech requires, and there's much less of it, but people don't have to put up with crap.
  - ljw1001 8y ago
    they are, but they're usually considered "IT" It's a secondary role compared to science. The computational action is for math, stats, and informatics specialists (like computational genomics). This often translates into lower status and lower pay. You really need some chemistry and biology to get love in a biotech firm.
- firstplacelast 8y ago
  I'm a bioinformatics scientist. Salaries are notoriously horrible in this field and I get paid better than most wet lab scientists who have more education and experience than me. I think biotech may be exacerbating inequality more than most industries, as the profits are most definitely not going to the employees like they do in other STEM fields.
- hkmurakami 8y ago
  You likely made a 2x salary decision as long as you’re a ground level employee in either field.
ghaff 8y ago
The greater Boston area gets overlooked a lot of the time because it’s relatively light on the web/social/mobile software businesses that SV thinks of as tech because that’s what SV majors on. As you say Boston is strong in a lot of tech areas but they’re often different from SV tech.
- EE84M3i 8y ago
  Boston also has lower mobility for tech workers, because in California non-competes are unenforceable but in Massachusetts they are.
  - e1ven 8y ago
    Massachusetts has recently banned them. https://www.jacksonlewis.com/publication/massachusetts-legislature-finally-passes-non-compete-law https://www.jacksonlewis.com/publication/massachusetts-legis...
    - ghaff 8y ago
      Not quite banned but definitely an improvement. As I understand it, the bill imposed a fairly significant garden leave requirement on companies looking to exercise a non-compete. It also prohibits companies from retroactively imposing.
      - arthurjj 8y ago
        "Garden leave" meaning the employer needs to pay the employee during the non-compete timeframe. https://en.wikipedia.org/wiki/Garden_leave https://en.wikipedia.org/wiki/Garden_leave
    - ljw1001 8y ago
      definitely not a ban. They're limited to salaried workers and to a year in duration. Not the three years that used to be standard.
  - eropple 8y ago
Symmetry 8y ago
I was going to pipe up about robotics startups around Boston but we're just around $250M. Very small compared to pharma but we're still pretty significant for any region that isn't The Bay.
dgant 8y ago
What's a good source for keeping up with the industry?
- aaavl2821 8y ago
  Endpoints news [0], fierce biotech [1], stat news [2] are a few good newswraps i follow I'm also working on a database tracking biotech VC activity. Still in alpha but you can take a look here [3] [0] https://endpts.com/ https://endpts.com/ [1] https://www.fiercebiotech.com/ https://www.fiercebiotech.com/ [2] https://www.statnews.com/ https://www.statnews.com/ [3] https://bio-vc-tracker.herokuapp.com/ https://bio-vc-tracker.herokuapp.com/
debt 8y ago
Confirmed. West coast biotech is back in business as well from La Jolla up to San Francisco. Many new biotech buildings and startups popping up.
whatyoucantsay 8y ago
> Boston is the world-center of biotech startups and VC Beijing is likely far ahead. Beijing's total VC investment is much higher, it accounts for over 1/3 of Chinese domestic VC and Chinese firms have accounted for over 40% of the biotech investment in US drug startups in the beginning of this year. https://www.bloomberg.com/news/articles/2018-04-18/chinese-money-floods-u-s-biotech-as-beijing-chases-new-cures https://www.bloomberg.com/news/articles/2018-04-18/chinese-m...
- aaavl2821 8y ago
  > Beijing is likely far ahead I don't think that's true. China is doing some amazing things in biotech, and they have perhaps the best young drug discovery talent base in the world, but most VC and innovative startups are in the US for now. Most of the Chinese VC investment has been in Series B or later stage rounds in US-based companies (some UK / EU as well). Most Series A rounds are led by US biotech VCs, and these VCs seed most of the funded startups as well. There are some large Series A rounds led by Chinese VCs (mostly Sequoia China), but not as many as by US VCs [0] -- disclosure: i created this database, it's still in alpha There have been a few mega-rounds for Chinese biotechs recently, but it seems like a lot of those are aimed at developing Chinese versions of drugs originally developed in the west. There are exceptions of course, like Legend Don't mean to knock China's biotech scene, but Beijing does not seem "far ahead" to me [0] https://bio-vc-tracker.herokuapp.com/trends https://bio-vc-tracker.herokuapp.com/trends
  - whatyoucantsay 8y ago
    Thanks for the resource link. Does the data set include domestic-only Chinese investors?
    - aaavl2821 8y ago
      It includes some but I can't imagine it's exhaustive. I think it has most of the Chinese megarounds If you know of any good data sources for domestic china biotech VC id love to see it
mathattack 8y ago
Is this because Harvard and MIT produces more scientists than Columbia and NYU? (Or more scientists who don’t go into financial services)
- aaavl2821 8y ago
  I think NYC has more scientists (not just NYU and Columbia but Weill Cornell, Mt Sinai, Rockefeller etc), and may even have more NIH funding than MA (could be wrong on this though) One reason is that there are just a ton of experienced entrepreneurs in Boston and few in NYC. One VC said that in NYC you could shoot a shotgun and not hit an experienced entrepreneur but in Boston you could shoot a water pistol and hit a dozen. Not sure why that's the case tho, maybe bostons legacy as a tech hub, more early stage VC, and more entrepreneurial culture at MIT / Harvard There is a huge concentration of academics, VCs, startups and big pharma outposts within walking distance of each other in Kendall square. In NYC it's harder to get around, and even in the Bay Area you have several biotech clusters in Berkeley, mission bay, SSF, and the valley
- ljw1001 8y ago
  We have Harvard, MIT, plus, the Broad institute (and others), the network of Harvard teaching hospitals (Brigham & Women's, Boston Children's, Mass General, Dana Farbar), with their surrounding cluster of commercial and non-commercial labs, plus the VC infrastructure.

biohax2015 8y ago

Makes me regret abandoning biotech/computational biology for the safer shores of software engineering :(

simmanian 8y ago
I would think software engineers are still very much needed in almost every biotech startup :)
- aaavl2821 8y ago
  There are some that rely very heavily on software engineers but most don't, although that is starting to change I think. The biotech startups that the tech press covers represent a tiny fraction (under 10%) of biotech startup activity. The separation between the biotech and tech startup worlds is almost at a global maximum. It used to be that major tech VCs were also major biotech VCs. Starting about 5-10 years ago tech VCs gave up on biotech. Coincidentally that's about when all the exciting stuff started happening Pretty much all of the big biotech exits are mostly not even covered in the tech press (with the exception of stemcentrx, unity and maybe a few others)
  - ghaff 8y ago
    AI/ML seem to be leading to some new companies that have a big software component. But in general the “tech” crowd doesn’t think much about pharmaceutical, biotech, personalized medicine etc.
  - nostrademons 8y ago
    Biotech requires several very different foundational assumptions than consumer-tech. You can't "move fast and break things" in biotech. You have to budget a lot more for R&D, and you have to be okay with dozens of experiments outright not working and not leading to anything useful. Having world-class scientific talent on your team is actually really important, while it's overkill for most software. Your iterations are usually about whether the science works, not whether the market will accept it. Technical risk dominates market risk. There's a large regulatory barrier to even getting a product to market. Your per-unit profits are often significantly higher than in consumer software, but your per-unit costs are higher, and your unit volumes are much lower. [source: I'm in consumer tech and my brother-in-law is a cancer researcher.] A VC's core competency is typically in knowing & applying the core industry dynamics to their investments, so if the core industry dynamics are different, it makes sense that VCs will eventually specialize in subjects that they actually know something about. Trying to apply consumer software "best practices" to biotech will get people killed and you sent to prison.
    - aaavl2821 8y ago
      I agree, i think the biggest issue right now with tech VCs starting to get back into biotech is that they don't appreciate the technical / scientific risk, or think they can magic the risk away with AI. The tech VCs are renewing their interest bc they've seen that its possible to get $10B+ exits in under 5 years in biotech (KITE and JUNO got to $10B valuations faster than I think dropbox, snapchat and twitter), but i think some of them misunderstand the risk, as you mention, and will get burned Cycles times are costly / more expensive, and companies usually only get a handful of chances to get it right. And it's too expensive to try to manage this risk through diversification alone -- cost of failure is too high. That's why biotech VCs spend so much time on diligence -- mostly scientific diligence -- compared to tech counterparts
    - mwcampbell 8y ago
      Somewhere in the multiverse, all software is developed with the care that biotech requires, and there's much less of it, but people don't have to put up with crap.
- ljw1001 8y ago
  they are, but they're usually considered "IT" It's a secondary role compared to science. The computational action is for math, stats, and informatics specialists (like computational genomics). This often translates into lower status and lower pay. You really need some chemistry and biology to get love in a biotech firm.
firstplacelast 8y ago
I'm a bioinformatics scientist. Salaries are notoriously horrible in this field and I get paid better than most wet lab scientists who have more education and experience than me. I think biotech may be exacerbating inequality more than most industries, as the profits are most definitely not going to the employees like they do in other STEM fields.
hkmurakami 8y ago
You likely made a 2x salary decision as long as you’re a ground level employee in either field.

ghaff 8y ago

The greater Boston area gets overlooked a lot of the time because it’s relatively light on the web/social/mobile software businesses that SV thinks of as tech because that’s what SV majors on. As you say Boston is strong in a lot of tech areas but they’re often different from SV tech.

EE84M3i 8y ago
Boston also has lower mobility for tech workers, because in California non-competes are unenforceable but in Massachusetts they are.
- e1ven 8y ago
  Massachusetts has recently banned them. https://www.jacksonlewis.com/publication/massachusetts-legislature-finally-passes-non-compete-law https://www.jacksonlewis.com/publication/massachusetts-legis...
  - ghaff 8y ago
    Not quite banned but definitely an improvement. As I understand it, the bill imposed a fairly significant garden leave requirement on companies looking to exercise a non-compete. It also prohibits companies from retroactively imposing.
    - arthurjj 8y ago
      "Garden leave" meaning the employer needs to pay the employee during the non-compete timeframe. https://en.wikipedia.org/wiki/Garden_leave https://en.wikipedia.org/wiki/Garden_leave
  - ljw1001 8y ago
    definitely not a ban. They're limited to salaried workers and to a year in duration. Not the three years that used to be standard.
- eropple 8y ago

Symmetry 8y ago

I was going to pipe up about robotics startups around Boston but we're just around $250M. Very small compared to pharma but we're still pretty significant for any region that isn't The Bay.

dgant 8y ago

What's a good source for keeping up with the industry?

aaavl2821 8y ago
Endpoints news [0], fierce biotech [1], stat news [2] are a few good newswraps i follow I'm also working on a database tracking biotech VC activity. Still in alpha but you can take a look here [3] [0] https://endpts.com/ https://endpts.com/ [1] https://www.fiercebiotech.com/ https://www.fiercebiotech.com/ [2] https://www.statnews.com/ https://www.statnews.com/ [3] https://bio-vc-tracker.herokuapp.com/ https://bio-vc-tracker.herokuapp.com/

debt 8y ago

Confirmed. West coast biotech is back in business as well from La Jolla up to San Francisco. Many new biotech buildings and startups popping up.

whatyoucantsay 8y ago

> Boston is the world-center of biotech startups and VC Beijing is likely far ahead. Beijing's total VC investment is much higher, it accounts for over 1/3 of Chinese domestic VC and Chinese firms have accounted for over 40% of the biotech investment in US drug startups in the beginning of this year. https://www.bloomberg.com/news/articles/2018-04-18/chinese-money-floods-u-s-biotech-as-beijing-chases-new-cures https://www.bloomberg.com/news/articles/2018-04-18/chinese-m...

aaavl2821 8y ago
> Beijing is likely far ahead I don't think that's true. China is doing some amazing things in biotech, and they have perhaps the best young drug discovery talent base in the world, but most VC and innovative startups are in the US for now. Most of the Chinese VC investment has been in Series B or later stage rounds in US-based companies (some UK / EU as well). Most Series A rounds are led by US biotech VCs, and these VCs seed most of the funded startups as well. There are some large Series A rounds led by Chinese VCs (mostly Sequoia China), but not as many as by US VCs [0] -- disclosure: i created this database, it's still in alpha There have been a few mega-rounds for Chinese biotechs recently, but it seems like a lot of those are aimed at developing Chinese versions of drugs originally developed in the west. There are exceptions of course, like Legend Don't mean to knock China's biotech scene, but Beijing does not seem "far ahead" to me [0] https://bio-vc-tracker.herokuapp.com/trends https://bio-vc-tracker.herokuapp.com/trends
- whatyoucantsay 8y ago
  Thanks for the resource link. Does the data set include domestic-only Chinese investors?
  - aaavl2821 8y ago
    It includes some but I can't imagine it's exhaustive. I think it has most of the Chinese megarounds If you know of any good data sources for domestic china biotech VC id love to see it

mathattack 8y ago

Is this because Harvard and MIT produces more scientists than Columbia and NYU? (Or more scientists who don’t go into financial services)

aaavl2821 8y ago
I think NYC has more scientists (not just NYU and Columbia but Weill Cornell, Mt Sinai, Rockefeller etc), and may even have more NIH funding than MA (could be wrong on this though) One reason is that there are just a ton of experienced entrepreneurs in Boston and few in NYC. One VC said that in NYC you could shoot a shotgun and not hit an experienced entrepreneur but in Boston you could shoot a water pistol and hit a dozen. Not sure why that's the case tho, maybe bostons legacy as a tech hub, more early stage VC, and more entrepreneurial culture at MIT / Harvard There is a huge concentration of academics, VCs, startups and big pharma outposts within walking distance of each other in Kendall square. In NYC it's harder to get around, and even in the Bay Area you have several biotech clusters in Berkeley, mission bay, SSF, and the valley
ljw1001 8y ago
We have Harvard, MIT, plus, the Broad institute (and others), the network of Harvard teaching hospitals (Brigham & Women's, Boston Children's, Mass General, Dana Farbar), with their surrounding cluster of commercial and non-commercial labs, plus the VC infrastructure.