Healthy investments
UPMC venture capital arm adds strength to city
For all of Pittsburgh’s growth in recent years, studies consistently show that the city’s economy has significant gaps. It doesn’t produce or grow startups as well as it should, it needs more venture capital and it needs to do a better job of commercializing research.
UPMC’s venture capital investments have the potential to help plug these holes and further raise the city’s profile. Its newest gambit is joining the American Heart Association and Dutch tech company Royal Philips in a $30 million fund, Cardeation Capital, that will invest in heart-related treatments and devices. There’s no guarantee that the fund will boost any Pittsburgh-based startups, but researchers and entrepreneurs looking for funds now have an opportunity they lacked before.
As the Post-Gazette’s Kris B. Mamula reported, the $10 million stake in Cardeation Capital is in addition to investments the health care system already makes through UPMC Enterprises, its venture capital arm focusing on translational science and technology. It has invested in at least 14 companies that work on everything from improving dialysis to developing software for insurers. Six of those companies are headquartered in Pittsburgh.
The investments dovetail with other initiatives, such as the conversion of the old Ford assembly plant in Bloomfield into the UPMC Immune Transplant and Therapy Center. Working with the University of Pittsburgh, UPMC will invest $200 million in the center with the goal of bringing to market drugs that manipulate the immune system to treat disease.
Besides offering UPMC the potential of new revenue streams, venture capital investments add bones to the city’s eds and meds economy, potentially drawing more researchers and entrepreneurs here, expanding the types of health care services for which Pittsburgh is known and, as start-ups grow, increasing the types of health care jobs available to Pittsburghers with different skill sets. All of this aligns with a Brookings Institution report, issued last fall, that cited Pittsburgh’s need to better tie university research to business and job creation and to harness this energy in an Oakland Innovation Zone. Local developer Walnut Capital obviously read the Brookings report: It recently bought the former Jewish Federation of Pittsburgh headquarters on McKee Place and plans to construct an office complex similar to its Bakery Square. Walnut already purchased the venerable Pittsburgh Athletic Association building and intends to develop former county offices along Fifth Avenue.
The UPMC investment is also in line with a May 2017 Pitt study asserting that the city has the raw ingredients to become a center for entrepreneurs in the life sciences but lacks a vision and funding. At the time, Pitt Chancellor Patrick Gallagher said the life sciences sector had the potential to outstrip energy as an economic generator, noting, “The Googles of health care are companies yet to be formed.”
Today, hospitals are the most visible manifestation of the city’s health care footprint. The future likely will hold something more, and investments like those UPMC is making will help Pittsburgh not only benefit from what comes but help to shape it.