Stem Cell Venture Capital
This week's Fortune has a very good article about the current state of embryonic stem cell research. One of the main focuses of the article is state and federal government funding of stem cell research.
The story states that there are currently only 185 stem-cell companies in the world operating with only $470 million in venture capital funding. Further the story states that government has to fund a lot of fundametal research because it is too risky for private investors. A lot has been made of federal restrictions on stem cell research, but the restrictions aren't on research, they are on federal funding of research.
This is an area of great interest for me. What is the proper role of government funding for research? If research doesn't hold enough promise for success that private companies are willing to invest in it, should governments invest tax dollars in it? Is primary research a good use of tax dollars, or should governments allow other enteties pay for that research, waiting to fund later stage research that is more viable?
I am still refining my views on this issue. It seems that there is a strong arguement that fundamental reserach is almost an infastructure issue for municipalities. By that I mean that paying for that research is the cost of acquiring and attracting the scientific tallent you need to generate later stage ideas that lead to commercialization.
With that being said, we just passed the 10th anaversary of Netscape's IPO. Netscape was the first widely distributed internet browser, the software that makes everything about the internet today possible. The research that led up to the browser (and the Mosaic browser that preceeded Netscape) were developed at the University of Illinois, other researchers from the University of Kansas later joined Netscape in the early days and helped refine the technology. By the time Netscape went public they had moved to California, despite the fact that the basic development happend at the expense of Illinois taxpayers, the economic benefits accrued to California.
I'm interested in gathering your thoughts on this question: what is the best role for government in research? What does a city or state need to do to create a commercially successful research community and from that perspective, what is the best use of taxpayer money. Post comments or send me an e-mail, I want to talk about the financial issues, the moral issues are a discussion for another time.
Timothy Burger
timothyb(at)timothyburger.com
posted by Timothyb @ 1:10 PM
2 comments
2 Comments:
Tim,
Although you could make the argument that Federal dollars would make more sense (along the lines of a NASA or Manhattan Project), several states are already investing in stem-cell research. California and Illinois come to mind. It seems Missouri had quite a tussle over this just a couple months ago. And, Kansas has it's "life science" project (which I believe specifically precludes stem-cells).
Although you don't want to go through the moral issues, morality is really more of a community standard issue, each of these communities have made their case and investment strategies (or lack thereof.)
Federal restrictions on stem cell research funding (too many people think George Bush banned the research altogether) have produced a wonderful example of the potential dynamism of our federal system. For a moment, forget questions of morality and medical ethics. Before we commit the nation's resources to funding research private investors find too risky and many citizens find immoral, allow the states to invest as much or as little in stem cell research as they like. The states, unbeholden to a large, centralized regulating authority, can experiment with different approaches this risky research: what types of research, in what amounts, at what stages, ROI analysis, and so on. We should leverage the experience of these state laboratories to track the stem cell field's progress. Once later stage research opportunities present themselves, then the federal government can focus it's enormous financial resources on research that isn't as speculative as the current stage of stem cell research. This course of action, while not resolving the ethical issues nationally, allows the debate to take place on a smaller, more workable scale. If 65% of Californians want their tax dollars to fund stem cell research, let them. Their social consensus on the ethics of stem cell research is far more valid than any "consensus" derived from George Bush's position on stem-cell research and his recent re-election. Those who oppose stem cell research should remember the converse is also true. If Kansas or Missouri develops a social consensus that stem cell research is unethical, why should Californians dictate otherwise. Funding of medical research is not an activity protected by the Equal Protection or Due Process clause of the Constitution. In other words; funding is a policy issue, not a right.
Great and fascinating issue Tim.
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