Keeps promise by increasing grants
Terry McAuliffe, while running for governor, dedicated himself to invigorating the state's biotechnology sector.
"Terry McAuliffe proposes … creation of the Virginia Biotech Startup Program. Designed to supply critically needed startup funds to entrepreneurs, inventors, or scientists hoping to prepare an idea to attract private capital," McAuliffe's said in his 2013 campaign platform. "This program would receive an initial capitalization of between 2.5 and 5 million dollars (depending on budget conditions) and would then be replenished as loans are repaid."
The platform said the biotech companies would have a one-year grace period before starting repayments.
We asked Brian Coy, McAuliffe's director of communications, for a progress report and he told us the loan program McAuliffe described in the platform hasn't been created. Coy noted the governor is still finalizing his priorities for his last year in office, and declined to say whether that program would be established when McAuliffe's term ends in January 2018.
But Coy stressed that McAuliffe has supported other biotech-funding plans that meet the spirit of his campaign pledge, if not its letter.
He noted that the state budget contains a $7.5 million appropriation over two years to the Virginia Biosciences Health Research Coporation. The non-profit provides grants - not loans - ranging from $200,000 to $800,000 for life science research geared towards producing new biotech products.
The program was created in 2013 under then-Gov. Bob McDonnell and usually has been funded with an annual $2.5 million state appropriation. Virginia's budget calls for doubling that amount to $5 million for the fiscal year that begins July 1, 2017.
Mike Grisham, the corporation's CEO, said he's urged McAuliffe to focus on grant funding rather than loans to boost new biotech businesses. The reason, he said, is that venture capitalists are leery of investing in new businesses that already have debt.
Grisham said about two-thirds of his corporation's $7.5 million biennial funding will be parceled out in grants. The rest will be spent on investments that help life science companies, such as the creation of a statewide registry of neurological patients that would allow the businesses to identify potential subjects for research.
Coy also pointed to a state initiative launched this year: the Virginia Research Investment Fund. The program, overseen by the State Council of Higher Education for Virginia, is slated to get $22 million over the next two years to provide grants and loans to academic research projects that might encourage the startup of new companies, including biotechs. Some of the money also can be used to attract "eminent researchers" to work at Virginia universities.
But the money, it should be stressed, is intended to go to state universities - not new companies. Alan Edwards, SCHEV's director of policy studies, told us start-up business loans "could happen through the fund, but it would have to be the result of research done at a public institution."
The state also has been setting aside $3.1 million a year for the Commonwealth Growth Accelerator Program to underwrite initial loans acquired by new biotech and energy companies. Although Virginia had a similar program prior to McAuliffe's term, funding for it has increased under his watch.
The bottom line is that McAuliffe hasn't carried out his exact campaign pledge to propose a revolving state loan program, with at least $2.5 million in seed money, for new biotech companies. We don't know whether that initiative is till on his to-do list.
But he's signed off on a different measure that in mid-2017 would increase the state grant money available to biotechs and life science companies by $2.5 million.Grants would appear to be more valuable to startup companies than loans.
The General Assembly which approved the grant increase in a two-year state budget it approved last winter, needs to authorize it again early next year. We'll let you know if anything changes.
Under McAuliffe's watch, the state has also increased its funds to underwrite loans acquired by biotechs and for university research that can help the industry grow.
So we rate this a "Promise Kept."
Terry McAuliffe's gubernatorial campaign, "Terry's Platform: Putting Virginia first: Biotech," Aug. 13, 2013.
Emails from Brian Coy, spokesman for Gov. Terry McAuliffe, Nov. 21 and Dec. 1, 2016.
Interview with Jeffrey Gallagher, CEO of Virginia Bio, Nov. 22, 2016.
Virginia state budget for the 2016-2018 biennium, May 20, 2016.
Interview with Alan Edwards, director of policy studies at the State Council of Higher Education for Virginia, Dec. 1, 2016.
Interview with Mike Grisham, CEO of Virginia Biosciences Health Research Corporation, Dec. 2, 2016.
Gov. Terry McAuliffe, "Gov. Terry McAuliffe presented with 2016 BIO governor of the year award," June 8, 2016.
Biotechnology Innovation Organization "Gov. Terry McAuliffe at the 2016 BIO International Convention," June 8, 2016.
State Council of Higher Education for Virginia, "Virginia Research Investment Fund (VRIF) and Committee (VRIC)," accessed Dec. 1, 2016.
H.B. 1343 from the 2016 General Assembly session, May 16, 2016.
Virginia Biosciences Health Research Corporation website accessed Nov. 22, 2016.
Commonwealth Health Research Board website accessed Nov. 23, 2016.