One year ago, in an effort to move the Birmingham life science ecosystem forward, we made our first investment; today, the First Avenue Ventures Life Science Fund I team is more committed than ever to generating and scaling local life science activity. The University of Alabama at Birmingham (UAB) continues to be a driver of our investment focus, and we have identified and continue to search for opportunities across this channel, as well as others. In some instances, we are providing both financial and human capital, which provides us with a close perspective.

To date, we have evaluated more than forty opportunities for potential investment. The majority of these have been in or around the UAB pipeline. The Fund has deployed $1.7M across seven investments so far. Of the dollars allocated, 60% represent UAB companies and 90% represent companies headquartered in Birmingham or the state of Alabama.

Although the public equity markets are down, we believe the capital markets will have a minimal impact on our on-going activity with early stage companies. With the prolonged timeline for value creation at these start-ups, we believe that the Fund will continue to deliver value to our stakeholders in the long term, and that valuable companies will continue to receive adequate funding. From our perspective, the early stage companies currently having trouble were not positioned well in the first place: in other words, their difficulties are not a result of the financial markets but of the fact that they were initially too risky. Therefore, our investment strategy aligns with the challenges of today’s market.

Specifically, we think our approach is advantageous – locally and nationally – for several reasons:

  • By focusing on a research center in the same city, we are uniquely positioned to develop relationships with premier researchers and scientists that allow us to uncover new opportunities;
  • By utilizing a fund, we offer a diversity of investment opportunities, which is critical in early stage investment as the risk of failure for any one venture is significant;
  • By focusing on the next milestone, the ability to access other capital is increased and our early stage capital is more effectively leveraged with later stage capital.

In summary, these favorable dynamics are the reason that we continue to advocate for the First Avenue Life Science Fund I and for similar funds. We are not trying to promote ourselves to the exclusion of others, but rather to encourage the development of other funds in our area. Whether through us or others, Birmingham needs equity investors and investments in our start-up landscape. Our first year has provided us with greater appreciation for all the stakeholders involved, including inventors, administrators, investors, engineers, and others. The Fund’s activity has also helped the broader ecosystem by providing comprehensive due diligence in the life sciences and by serving as an access point for syndicates aiming to engage our pipeline for opportunities.

While we see Birmingham as rich with opportunity, the city is still challenged as a life science ecosystem. Other communities of all sizes are busy providing the infrastructure to do this work. More established markets, such as Boston, New York, and San Francisco, are far ahead of Birmingham; the reality is that the geographic density of a city matters when it comes to economics.

Communally, we have to evolve how we think about innovation from setting a course of our own to finding ways to succeed by creating companies with a similar mindset to those in larger hubs. In order to do this, we need to (1) have more equity investment in start-ups, (2) have a greater focus on creating companies that can compete at a national level, and (3) look at opportunities from the perspective of national investors, not just local investors. That is the approach we are taking with the Fund; we are happy to discuss our perspectives with you.

Mike Goodrich
Principal, First Avenue Ventures and First Avenue Ventures Life Science Fund I

Saksham Narang
Managing Partner, First Avenue Ventures Life Science Fund I