Capitalizing On Clusters | How Worcester's concentration of biotech can work in its favor
As a venture capitalist targeting New England, I spend most of my working day looking for, and working with, growth-oriented, early-stage companies in the region. Like most early stage investors, I seek high growth industry sectors in which to find and fund companies.
Some of the region’s more visible industry “clusters” include biotechnology in Cambridge (Genzyme, Biogen Idec), optic lenses in southern Vermont (Omega Optical, Chroma Technology) and natural products in northern New England (Stonyfield Farm in New Hampshire, Tom’s of Maine, Ben & Jerry’s in Vermont).
When our fund develops a region- and sector-focused investment strategy, we research sector competencies that may be found in the regions we serve. Clusters — geographically concentrated groups of interconnected companies and universities — matter because they often increase the productivity with which companies compete.
When states focus on clusters, other resources often emerge, such as university talent, capital sources and other items important to a developing company or cluster of companies. As investors often seek to extend the life of their equity investment by leveraging their capital with government contracts, bank credit, and other such sources, a purposeful focus of this sort can pay dividends.
As clusters develop (whether by concerted effort or accident), states can enhance their development strategies by considering where they have current competencies.
The Cluster Scene in Central Massachusetts
The Massachusetts Office of International Trade and Investment (MOITI) notes the following as its “clusters” of competitiveness for the state at large:
• Health Services
• Biotechnology
• Telecommunications
• Photonics
• Medical Devices
• Environmental Technology
• Financial Services and Insurance
• Advanced Materials
• Marine Science and Technology
• Manufacturing and Other Sectors
Information Technology (software, web, etc), too, has always been a strong cluster inside the 495 belt, and more recently just outside 495, into Central Masachusetts. Cities like Westborough and Marlborough have seen the lion’s share of venture capital activity, with considerably less activity in the Worcester area.
Worcester has — working with affiliated partners throughout the state — secured meaningful investment to develop biomed and life sciences facilities such as Gateway Park in Worcester. Worcester’s concerted efforts, in partnership with the state, universities (Worcester Polytechnic Institute), economic development organizations (Worcester Business Development Corp., Massachusetts Biomedical Initiative) and others have all the hallmarks of a well conceived cluster-in-development. This sort of purposeful commitment to a given sector/cluster should pay dividends if other elements (e.g. capital) of a successful cluster are available.
Capital matters
As previously stated, Central Massachusetts venture capital investments are concentrated along the I-495 corridor, with considerably less located in Worcester. Venture capital and angel investors with a regional focus include Worcester Capital Partners and Boynton Angels. Clear Venture Partners, a fund-in-formation, will be targeting Central and Western Massachusetts — as well as other secondary New England regions — once it reaches its first close.
Provided that local capital providers, coupled with their less-regionally focused Greater Boston venture capital funds, are open to committing their funds to well supported sectors like life sciences, the Worcester area can realize its hope to develop high growth businesses and jobs using this form of cluster concentration. n
Michael Gurau is managing general partner of Clear Venture Partners, a fund targeting New England secondary cities including Worcester. He can be reached at mg@clearvcs.com.
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