The N.C. Biotechnology Center has expanded a loan program in an attempt to help start-up companies bridge the gap between inception and significant capital investment.
The center said that small biotech companies could qualify for up to $1 million in loans.
"Building a viable biotechnology company requires years of struggle and millions of dollars," John Richert, the vice president of the Business and Technology Development Program for the center, said last week. "And costs keep rising."
"So, we've not only increased the caps on these offerings, but we've also made some revisions to fill funding gaps and stay ahead of the changing dynamics of the marketplace," he said.
The push for expanding the loan program came from members of the venture-capital community, university technology-transfer offices and entrepreneurs.
The program already has provided more than $16 million to more than 100 startup companies since the center was established in 1984.
The loans are offered in stages, such as inception, research milestones and overall growth. For example, the center offers a $50,000 company-inception loan that's geared toward corporate spinoffs or startups from universities. There's also a $50,000 technology-enhancement grant for technology-transfer offices at North Carolina universities.
"That's to help them make technologies they may have on their shelves more licensable," Richert said.
For companies that need funding help for their research, the center is providing "bridge loans" of up to $150,000 -- doubled the previous cap. The maximum for small-business research loans, which support applied research, has increased by $200,000 to $350,000.
Companies meeting milestones defined in a $250,000 strategic-growth loan are now eligible for a second $250,000 infusion. The loans still require matching investment from a qualifying investment fund.
The loans should help lend more confidence to venture and angel investors studying the local and state biotech sectors, said Troy Knauss, a funding executive for the Piedmont Angel Network.
"The program helps make these companies more investable at different stages," Knauss said.
The increased financing is especially welcomed since it comes at a time when the national biotech sector has limited seed money for startup companies, said Bill Dean, the president of Idealliance, which manages Piedmont Triad Research Park in downtown Winston-Salem.
"Biotechnology, by its general nature, is an inherently risky investment," Dean said.
"That's why venture capitalists traditionally have leaned toward late-stage biotech and life-science companies because their risk is not as great as with early stage companies," he said.
"This expansion of the loan program fills another piece of the puzzle for startups, just like the opening of the wet lab" at the research park last December, Dean said.
"It will help get promising products out sooner to the market and to the end-user, the consumer," he said.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
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