Survey Finds Life Sciences Incubators Anticipate Gains in Funding, Locations

(Illustration courtesy of CBRE)

Most U.S. life sciences incubators anticipate that their funding will increase over the next five to 10 years–and 63% expect to open additional locations–according to a new survey from CBRE, Dallas.

The survey, conducted from November 2023 through January 2024, included 27 incubators across the country. Incubators typically provide startup companies as small as one or two employees with lab space, office space, mentorship and, in some cases, funding.

CBRE’s survey confirmed the long-held practice of most incubators getting their funding from public or quasi-public sources: government agencies back 43% of the incubators in the survey, and academic institutions 14%. Private funding sources claim the next largest contingents – self-funding at 14% and venture capital at 9%.

That funding mix bodes well for the stability of incubators and their contribution to the sector’s company formation and job generation, the report said. More than 60% of incubators said they anticipate their funding will increase in the coming years.

“Incubators can be a cornerstone of emerging and established life sciences hubs,” said Matt Gardner, CBRE Americas Life Sciences Leader. “In tougher financing environments like this year and last, incubators play an even greater role for the industry in nurturing the next generation of companies.” He noted this is one reason why the life sciences sector goes through longer cycles than the broader economy.

Most incubators–86%–operate on or near university campuses, putting them close to life sciences entrepreneurs, funding sources and new research, CBRE said. More than 50% of incubators in the survey said they anticipate their locations expanding in the coming years to larger footprints. Incubator locations typically range in size from 20,000 to 40,000 square feet.

One perhaps surprising finding of the survey: Biotech companies aren’t the most common tenants in life sciences incubators. Instead, 18 of the 20 incubators that responded to that question in CBRE’s survey said they count medical device startups among their tenants. The next most popular category was biotech companies at 15 incubators, followed by therapeutics startups and medtech companies at 14 apiece.