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Delaware Innovation Space marks 5 years of growth

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Felipe Mojica, a mechanical engineer at Versogen, monitors a reactor at the Delaware Innovation Space where they produce a proprietary membrane. | DBT PHOTO BY ERIC CROSSAN

WILMINGTON – In 2016, a coalition of some of the First State’s most powerful and influential leaders came together in a brick building at the eastern edge of the historic DuPont Experimental Station.

Delaware’s governor, two U.S. senators and representative, the president and a top executive from the flagship University of Delaware, and leaders from the state’s most important legacy company gathered in the Wright Building to participate in planning what is today known as the Delaware Innovation Space, a public-private startup incubator that has already produced one public company that is growing quickly and supported others in significant expansions.

“Delaware has been a magnet for engineers, chemists and other talented workers for decades because of the DuPont company. And with the Innovation Space at the Experimental station, we’re continuing to lean into science and innovation as part of our state’s DNA,” Gov. John Carney said. “The Innovation Space was one of the first economic development projects of our Administration … and we’ve seen an incredible return on our investment.”

Idea incubated

The Delaware Innovation Space occupies an old building at the DuPont Experimental Station. | DBT PHOTO BY ERIC CROSSAN

As the executive then overseeing global laboratories and innovation centers and connections with the universities, national labs and startup companies for DuPont in 2016, Innovation Space President and CEO Bill Provine was in many ways tailor-made for the role.

As DuPont undertook a short merger with Dow, Provine said company leaders began reassessing how it drives innovation. He was inspired by JLABS, a life sciences incubator run by pharmaceutical giant Johnson & Johnson, and brought the idea to company leaders to replicate here.

Provide was directed to seek buy-in from UD and the state on the idea – at a time that both were awaiting leadership changes.

Dennis Assanis, then provost at Stony Brook University in New York and an accomplished scientist himself, had been named the incoming UD president. Provine began discussing the idea with Assanis before he had even arrived in Delaware.

“(Assanis) wanted to intensify experiential, entrepreneurship learning within the University of Delaware,” Provine recalled. “So, he bought in very quickly, and so did Charlie Riordan who was leading the research and scholarship areas for UD. They were great partners working with myself and [then-DuPont Chief Technology Officer] Doug Muzyka.”

The group then conferred with Gov. Jack Markell, who too saw the potential for a significant impact in economic development in Delaware, but he was rapidly approaching the end of his second term in office. They added U.S. Sens. Tom Carper and Chris Coons, and then-Rep. John Carney, who would win the governorship that fall.

Within three months of Carney taking office, he completed the vision by supporting a public-private model to start the Innovation Space, securing a three-year, $5 million Strategic Fund grant. UD pledged $1.5 million over three years along with grant-writing and faculty support while DuPont pitched in $1.25 million, the Experimental Station facilities worth $15 million and $2 million in lab equipment.

“I have to say, from day one, people came together,” Provine said. “It started from a place with just a few people but a great partnership. If it was all me by myself, this place wouldn’t be what it is today.”

(L-R) Mike Braun, Hattie Duplechain, Bill Provine, Mona Parikh, Alex Dulin, and Pedro Amaral help startup companies grow at the Delaware Innovation Space. | DBT PHOTO BY ERIC CROSSAN

Selling Delaware

Those early days proved to be a hard sell, as the project worked to get all of its space renovated and its programs up and running, Provine recalled. Many prospects couldn’t yet see what it would become.

Today, that pitch is a bit easier with modern lab space ready to go, mentor and development programs running annually and an investment fund looking to support growing companies. At 130,000 total square feet, the Innovation Space would rank among the largest science-focused incubators in the U.S., or even the world, Provine said, noting most spaces would be around 30,000 square feet.

“People come in here and they’re impressed no matter where they’ve been,” Provine said.

The Innovation Space has a portfolio of more than 30 clients ranging from very small emerging prospects to established publicly traded companies. It’s adding five more this year, including the U.S. subsidiary of Novasep, a French contract development and manufacturing company that focuses on complex small molecules and drugs. It’s planning on relocating its Pennsylvania location to the Innovation Space.

 Five years ago, Provine said he would have been very happy to have a total investment of $100 million in their portfolio companies by now, but today those companies have exceeded $800 million.

Monisha Prakash, a senior researcher at Prelude Therapeutics, checks a cell culture to see if a test drug was effective. | DBT PHOTO BY ERIC CROSSAN

Leading the pack is Prelude Therapeutics, a biopharmaceutical company developing small-molecule drugs to treat rare cancers. Led by founder and CEO Kris Vaddi, a veteran of Delaware-based Incyte, the company has grown from a small startup space at the University of Delaware to occupy 30,000 square feet at the Innovation Space.

In September 2020, Prelude held its initial public offering to begin trading on the stock market and has subsequently raised $330 million in stock sales. Last fall, it announced that it would leave the Innovation Space later this year to move into a newly built headquarters in the Chestnut Run Innovation and Science Park (CRISP), a project by Pennsylvania-based developer MRA Group to reimagine the former Chestnut Run labs of DuPont.

“Since we founded Prelude in 2016, we have benefited from support at every level in Delaware – from local and state government to the blossoming life science community. During our early stages at the Innovation Space, we were connected to resources, people and lab space that helped our company grow. We look forward to building the next chapter of our story when we move to our new headquarters in the coming months,” Vaddi said.

At the other end of the Innovation Space spectrum is Napigen, a startup founded six years ago by former DuPont researcher Hajime Sakai that is using a specialized gene-editing technology to produce larger wheat yields. Now with 10 employees, it’s been testing its science with the goal of one day partnering with a larger seed company – perhaps even DuPont spinout Corteva.

Mina Hamdi, a research associate for plant science at Napigen, prepares a plant tissue culture during a study. | DBT PHOTO BY ERIC CROSSAN

The Innovation Space allowed Napigen to stay in Delaware, where its talent is located, Sakai said. Otherwise, it may have been forced to move to a market like Boston or San Francisco.

“It was very difficult to find nice lab space in this community in this area, so we are very grateful to have that space here,” he said.

He also noted that when Napigen needed to find greenhouses that could grow their test crops year-round, the Innovation Space connected them with FMC Corp., which operates the Stine Research Center in Newark. Those kinds of connections are emblematic on the network of support that the Innovation Space can provide clients.

“This definitely helps us accelerate our research and development,” Sakai said of the lease with FMC. “High-yielding crops are not just critical for feeding the world with our exponentially expanding population, but also for the environmental protection because production of more grains in existing farmlands help reduce the need for deforestation to create new farmland.”

Challenges ahead

Provine has long said that a good startup ecosystem needs three things: space, talent and investment capital. With generations of workers from DuPont, Incyte, AstraZeneca and more in the region, talent has always been a strong point for northern Delaware.

And while state officials have focused on increasing suitable lab space for companies to occupy – primarily through a grant program to subsidize the cost of building it – Provine said he is more concerned about finding funding, especially early seed funding.

“The No. 1 challenge is getting the good ideas and getting them going … We’re trying to court companies just as they exist,” he said. “Because once you’re growing a company with a little more of a track record, people can see things and it can draw people and money in from out of the region more successfully, whether to build space or expand capabilities.”

Although the Innovation Space has attracted some clients to the incubator from around the region, the majority have been Delaware startups to date. Provine said that his team aims to increase the number of out-of-state companies being served.

Another Innovation Space company, Versogen, has been improving its patented anion-exchange membrane, seen here, for clients, but its moving toward building larger electrolyzer stacks, seen at center. | DBT PHOTO BY ERIC CROSSAN

“To get the deal flow that we aspire to help grow economic development and meet the goals that we have, we have to draw people here from out of state in addition to supporting the great ideas that are in the state as well,” he said.

To that end, the Innovation Space has invested $300,000 to date in its portfolio companies through its First Fund. While authorized to invest up to $1 million in companies this year for equity stakes, Provine said they are unlikely to reach that sum due to the lower investment level – around $25,000 to $50,000 with lab space – compared to neighboring areas. Notably, Pennsylvania’s Ben Franklin Technology Partner program invests more in startups and is supported by the state.

“We’re at the nexus of a four-corner state … You’ve got to be competitive in that landscape,” Provine said. “I think public venture capital within the state of Delaware is important and critical.”

The Carney administration is reportedly reviewing the State Small Business Credit Initiative, a program recently reauthorized with $10 billion for states by the U.S. Department of Treasury to invest in and loan to small businesses and startups with an eye toward socially and economically disadvantaged founders.

“I hope they do go down that road,” Provine said.

Meanwhile, the Innovation Space intends to expand its First Fund to invest in Delaware companies that aren’t its tenants. Provine noted that a growing number of digital health and medical technology startups may be able to find less specialized space outside of the Innovation Space campus but could still benefit from its investment fund. All of those efforts support its original goal, Provine said.

“What we’re trying to do is support companies that are trying to change the world, going after the big, audacious goals of curing cancer or curbing climate change,” he said.

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