A line BioSTL Founding President and CEO Donn Rubin likes to use to characterize St. Louis is that it is "big enough and small enough," and it's a characterization he thinks the city should build on.
"When we did, about a decade ago, a branding exercise, we did a town hall meeting and surveys and others, we found that there were, in comparing us to our competitors around the country on the coast and in Middle America, we found that there was the set of assets that puts us on the list with all the best places," Rubin says. "So, we belong in the big leagues. But there is this other category of things that distinguishes us from the others in a good way. We're more capital efficient — some people say low cost, we like to say capital efficient. An entrepreneur can hit milestones with a lot less capital in St. Louis. And there's this intangible thing that, it's hard to put the words on it without offending our competitors maybe, but we're more grounded. We heard over and over again from inside and outside St. Louis, people don't have to deal with the BS in St. Louis that they deal with when they're doing transactions on the coasts. So, we're big enough that we have all of the assets, and we're small enough to have access and a collaborative community. And we should probably capitalize on that big enough/small enough kind of dichotomy."
Speaking at the St. Louis Smart Business Dealmakers Conference during the midday panel on Why Building Companies in St. Louis Makes Good Sense, he, along with USAKO Group President and CEO Dr. Han Ko and Capacity Chief Strategy Officer Douglas Wilber shared their perspective on what it takes to build a company in the region.
As Wilber says, a rising tide raises all ships, so it's about identifying the things business leaders in the city can be doing each and every day to make St. Louis a little better place to live and grow a business. Part of that, he says, is the role that local government plays.
"The civic leader and business leader has to work together to build a community," Ko says.
He emphasized the importance of the having civic, business and government working together.
"I've seen over and over that the marketing community can be successful, or they lack resources," Ko says. "The government has the most resource, but they can provide the venue and pathway to promote the regional economy (on an) international level. So, for example, we, as in Greater St. Louis ,have great infrastructure. That's I call it unfair advantage. So, first of all infrastructure. Where else can you find a waterway — Mississippi River — we have two airports, also we have the highway system, of course, the interstates connected, and then railroad. So, infrastructure wise, we have a great environment, and also talent pool, Washington University, St. Louis University, University of Missouri, provide a tremendous talent. And then along with the experience talents, as in, Monsanto, well now Bayer. And then also multiple other industries are actually providing all of those. Also, above all, the operating cost efficiency, in other words, venture capital. We call it runway. How long are you going to be able to run with certain X amount of dollars? Well, when you go to San Francisco compared to St. Louis, the runway is three times longer, minimum. I think our government can help us to promote our market, not just regionally or nationally, but internationally, so businesspeople like us can sell our market better."
Rubin, however, offered a contrarian perspective on the importance of public/private partnerships. As an organization that has been privately funded from the beginning. He says that initially felt like a weakness because there were states putting lots of money into building their life sciences and their innovation economy. But that private backing became an advantage because it meant having predictable, consistent, committed private funders.
"It was a blessing to have these visionary funders from the beginning," Rubin says. "And while governors were changing in other states and new administrations were coming in and out, they would just cut off programs — there was no predictability, there was no certainty. And having the private sector, private philanthropy and the private sector, supporting an effort and having a vision, a long term vision, has allowed us to be a very unique organization, and has allowed St. Louis, in a very unique way, to develop an ecosystem around biosciences, around innovation, as compared to some places that have relied on the public sector, which comes and goes and is subject to the whims of whoever's in power during a particular administration."
The other aspects that's imperative to success, Wilber says, is access to capital. Fortunately, in St. Louis, there are a number of accredited investors. However, the hope is that a greater percentage of them can be engaged in investing back into the community.
While there is a great deal of inherited wealth relative to other communities in the country, they tend to be conservative investors — a tendency that Rubin sums up as St. Louis being a city with deep pockets and short arms.
"We've suffered from that here as we try to raise venture capital, try to raise funding," Rubin says. "But we have seen — we at the BioSTL and our investment arm, the BioGenerator — we've supported about 500 startups in St. Louis. We've invested in a little over 100 startups. Those startups that we've invested in have raised almost $3 billion now. Ninety percent of that comes from outside St. Louis, outside Missouri, from venture capital funds and institutional investors on the East Coast, on the West Coast, in Europe, in Asia. These are investors that, 10 years ago, never heard of St. Louis, or certainly never imagined themselves investing in St. Louis. So, we've been able to change that narrative, and be able to attract that funding. What we've shown is that if you can start and build a quality company, a quality team, great technology that's proven, and we can bridge the gap at that earliest stage — really risky capital, the valley of death — then we can attract capital from lots of other places."
His hope, then, is to bring in more local capital to fill the early-stage gap to help de-risk those companies.
"If we can de-risk them, we can attract capital from lots of other places, and capital that doesn't insist that the company move to California," he says. "We've been able to keep 98 percent of those companies here in St. Louis."
Part of that, Wilber says, is doing a better job of getting high-net-worth, accredited investors off the sidelines, giving them opportunities to not only invest, but do more.
"As an entrepreneur and a founder myself, I've always said the best source of capital for my business is actually revenue from customers," Wilber says. "And I've beaten my head against the wall for years now with selling into the industries that we've sold into. In many ways, I've seen it as almost like local companies don't want to buy from the St. Louis startup ecosystem, that we can't quite be good enough. We have to buy from a San Francisco technology company instead of a St. Louis technology company. How do we fix that narrative? Like, what's that thought process of getting the folks that are sitting on the sideline that should be investing in these businesses, but more importantly, how do we get them off the sidelines from a commercialization perspective?"
