South Florida’s history of healthcare entrepreneurship has received a shot of new startup energy, and some business leaders see it as the prescription for a healthier local economy.
Consider these developments:
▪ Startupbootcamp, Europe’s largest accelerator that is expanding globally, will announce Monday that it is bringing an accelerator focused on digital health to Miami, its first in the United States. Funded by the John S. and James L. Knight Foundation and other local and industry partners, its mentor-driven program will help 30 high-potential health-tech startups grow in South Florida.
▪ Three weeks ago, the Cambridge Innovation Center, a technology-focused co-working company, announced it will open a center next year that could eventually house 500 startups in the University of Miami Life Science & Technology Park. That will provide a critical link between the startup community and Miami’s large health district.
▪ Not only are support services for healthcare-related startups growing, but South Florida biotech, medical device firms and health-tech companies have taken the lion’s share of this year’s venture capital in South Florida and almost half of the state’s take. The area’s three leading funding rounds, in fact, are early-stage companies in this industry: Fort Lauderdale telemedicine company MDLIVE’s $50 million financing in the second quarter, Boca Raton-based electronic medical record software provider Modernizing Medicine’s $38 million financing in the third quarter, and Dania Beach orthopedic robotics company OrthoSensor’s $19 million in the first.
“In the last six months, more than 100 business plans have come across my desk, compared to three years ago, maybe 10 or 20,” said Dr. Maurice R. Ferré, who co-founded robotics company MAKO Surgical, which was acquired by Stryker for $1.65 billion in 2013. He’s now involved in four healthcare-related startups. “People are really excited about this area — it is starting to get some buzz.”
To be sure, the life science and health-tech ecosystem is widely dispersed throughout the three-county area. There isn’t a strong, focused cluster like in Boston or Silicon Valley, but there is rich history here dating back more than half a century. Many of the area’s medical device companies trace back in some way to Cordis Corp. in South Florida, where one of the first pacemakers was invented. In the pharmaceutical industry, serial entrepreneurial billionaire Phillip Frost has the golden touch, including founding and selling generics maker IVAX to Teva Pharmaceuticals for about $7.9 billion in 2006. Now he’s innovating again with Miami biotech company Opko Health.
Beyond the history, the infrastructure is here, too. Miami houses the second-biggest health district in the United States after Houston. Three universities, eight hospital facilities with more than 30,000 beds, nearly a dozen research institutes such as the Miami Project to Cure Paralysis and the Diabetes Research Institute, the UM life science park and dozens of early-stage companies operate in a 25-square block area just north of downtown Miami.
In Broward and Palm Beach, medical device firms and life science research are flourishing, helped by the openings of permanent facilities of Scripps Research Institute in 2009 and Max Planck Florida Institute for NeuroScience in 2012. Adding to the momentum was the fast growth of Davie-based MAKO, which is spawning more robotics device companies, including OrthoSensor and Neocis.
In Miami-Dade, there are 1,078 life science companies employing about 10,597 people at an average wage of $79,453, according to the Beacon Council, Miami-Dade’s economic development agency. There are more than 500 companies in Broward also providing wages nearly double the county’s average, including most recently India-based Lupin, which opened a Center of Excellence for Inhalation Research in Coral Springs, creating 45 jobs and plans for more, according to the Greater Fort Lauderdale Alliance, Broward’s economic development counterpart.
These numbers don’t typically include health-tech companies classified under different categories, such as MDLIVE and Miami’s CareCloud, an electronic health-records provider, which together employ more than 500 people.
But these feisty health-tech companies are roaring onto the scene as the critical third leg in the life science-medical device-digital health ecosystem, a trend to which economic development leaders and universities pay close attention. These companies provide tools for virtual doctor visits, big data, electronic health records, pharmacy price comparisons and personal wellness assessments, for example. Unlike their life science brethren with long development cycles, health-tech companies can ramp up and generate jobs quickly.
They are an outgrowth of the merging of South Florida’s traditional healthcare industry with an emerging tech ecosystem building in the tri-county area. And as clusters of specialized companies begin to form in the technology ecosystem, healthcare is a natural attraction as it is one of the region’s strongest industries. Already, the area is seeing sub-clusters forming in medical devices, stem cell therapies, robotics and mobile health technologies, to name a few.
Norma Kenyon certainly does. The chief innovation officer at UM’s Miller School of Medicine runs U Innovation, which consists of the Wallace H. Coulter Center for Translational Research focused on funding promising biomedical research, and the university-wide Office of Technology Transfer, responsible for the commercialization of UM intellectual property.
Currently her office works with 44 UM-related startups in the life sciences, medical devices and healthcare-technology industries, including Heart Genomics, InflamaCORE and MobileCare. Nearly three-quarters of them were formed in the past three years, she said.
Twenty-eight of the startups have licensed UM technologies, and a growing number of them have received funding. For example, Vigilant Biosciences is getting ready to launch its first product, OncAlert, in Europe aimed at discovering the risk of oral cancer. It has received nearly $8 million in funding, including from the Florida Institute for the Commercialization of Public Research. Dr. Eckhard Podack, a cancer researcher who recently passed away, was the originator of three UM startups, including the first IPO of the crop, Heat Biologics.
“This innovation piece is a very important part of the future health of research and development of new treatments in the healthcare space,” she said. “The technologies available in other schools and colleges become very important as we move forward. Engineering really is becoming very integrated with healthcare. It’s a very exciting time.”
U Innovation started an Idea Portal in the past year to faster connect with and help faculty and students with their life science or health-tech ideas. The ideas are pouring in, and many are coming from engineering, Kenyon said. In the next year, she hopes to start an early-stage fund and offer subsidized space for startups to work.
Ferré sees a similar trend at Florida International University: “I see a lot of excitement from these engineers wanting to start companies and be part of this ecosystem.”
At the intersection of tech and healthcare in South Florida, Ferré sees opportunities in the computational analysis of genomics data, as well as personal activities, areas where Startupbootcamp can help find, accelerate and fund startups, he said. “In this new world of personalized medicine, what technology is doing is democratizing, making it a lot less expensive. ... As an economy we are spending 18 percent of our GDP on healthcare — there’s a huge opportunity to create efficiencies.”
Ferré is also seeing interest from new funds, and to be sure, there has been progress on the investment front. So far this year, healthcare-related companies in South Florida, including health-tech, biotech and medical device companies, have nabbed nearly $176.8 million in venture capital — more than three-quarters of South Florida’s total of $232 million and more than double what South Florida healthcare companies in the sector received in all of 2014.
Venture capitalist Karl Elderkin said he’s excited about the number and quality of deals flowing from South Florida as well as the growth in infrastructure and support services, such as incubators and university programs. He also likes the area’s attractiveness to smart millennial entrepreneurs: “I think that is going to change the economy of South Florida.”
He is founder and managing partner of Athenian Venture Partners, an early-stage venture capital firm with offices in Fort Lauderdale and Ohio. The firm, with $105 million under management, specializes in healthcare and tech, generally making $2 million to $8 million investments over multiple rounds. It plans to raise its fifth fund shortly and hopes to start making investments next year.
Companies like Magic Leap and Scripps attract very talented people from outside Florida “and it is people like that that create more opportunities for more talented people,” said Elderkin, who is also on the board of the Florida Institute. “If our thesis is right, we think we will be early into a market that is very poised for growth. We think South Florida is a good bet.”
Still, funding continues to be a challenge and South Florida and the state receive less than 1 percent of the national venture capital total. BioFlorida, the state’s industry organization, said in its 2015 report that it’s not surprising since Florida’s companies are still mostly at the very early stages, too early for firms like Athenian, and development cycles are long.
Startups have had to look far and wide for funding. Hialeah’s Entopsis, which is developing a universal platform that would allow diagnosis for multiple diseases easily, cheaply and quickly, found its first support in California, through PayPal billionaire Peter Thiel’s Breakout Labs. Then the company raised a seed round from Miami’s Krillion Ventures and G3 Capital, as well as investors in Hong Kong.
As healthcare entrepreneur-investor Samuel Reich sees it, there are three pieces to a strong ecosystem, and South Florida already has one: the research with universities and institutions such as Scripps, UM, FIU and FAU. “We need capital, and we are working on that, but I think it will follow the science, and we need human capital,” said Reich, executive chairman of early-stage Biscayne Pharmaceuticals. “We need more entrepreneurs, which will bring the money, which will keep the scientists here.”
Todd Holt agrees. He has studied the life science industry for the past nine years, first as part of Enterprise Florida, the state’s economic development organization, and currently as director of business development for the Greater Fort Lauderdale Alliance.
He’s particularly excited about Nova Southeastern University’s Center for Collaborative Research, opening next year. The $80 million center, which will feature one of the state’s largest web labs, an IBM supercomputer and a tech incubator, is aimed at expanding NSU’s basic research in areas like heart disease, cancer and autism and will be putting into place systems to spin out technologies, including helping founders find funding and navigate the regulatory maze.
“That is where we see the returns,” Holt said. “Once commercialized, we can work to have it manufactured here.” That has attracted support services, such as companies providing contract manufacturing or regulatory support.
Not only is South Florida’s diverse population and hospital-rich ecosystem attractive to the startup and scientific communities for beta-testing, clinical trials, customer bases and partnerships, but Jaap Donath, senior vice president of research and strategic planning at the Beacon Council, said Miami-Dade has also seen increased interest from healthcare-related companies locating Latin American offices here. “These are good paying jobs and put us on the map as a center for life sciences.”
Nancy Dahlberg; 305-376-3595; @ndahlberg
BY THE NUMBERS
$79,453: Average wage in the life sciences industry in Miami-Dade County
$44,140: Overall average wage, Miami-Dade County
2: Rank of Florida among states for the number of medical device companies
92 percent: Growth of Florida biotech industry since 2008, by number of companies
44 percent: Growth of U.S. biotech industry since 2008, by number of companies
$176.8 million: Amount of venture capital flowing into South Florida life science, medical device and health-tech companies so far in 2015
Sources: Beacon Council, Bureau of Labor Statistics, BioFlorida, Miami Herald research
A small sampling of resources available to healthcare entrepreneurs:
Enterprise Development Corporation of South Florida: Provides mentoring and other support, http://enterbusiness.org/
Florida Institute for the Commercialization of Public Research: Provides funding and support for early-stage healthcare companies spinning out of Florida’s universities, www.florida-institute.com
New World Angels: Not exclusively for healthcare-related investments, but 40 percent of the angel fund’s deals have been in the space, newworldangels.com.
Startupbootcamp Miami: A new accelerator solely focused on digital health opening in Miami in 2016, http://www.startupbootcamp.org/accelerator/digital-health.html
Venture Hive: An accelerator founded in 2013 in downtown Miami that includes healthcare as one of its verticals, venturehive.com.