Earlier this month, the Trump administration directed the National Institutes of Health (NIH) to impose limits on specific types of funding it provides to research institutions.
Although a federal judge has temporarily blocked the policy change, government grants to early-stage biotech startups could still face delays or be eliminated entirely, said Chris Gibson, co-founder and CEO of Recursion, a biotech that uses AI for drug discovery.
Gibson, together with a serial biotech entrepreneur, David Bearss, saw the confusion as an opportunity to launch a pre-seed venture fund, dubbed Altitude Lab Pre-seed Venture Fund, that will seek to invest $100,000 to $250,000 in 10 to 15 biotech companies.
Gibson said startups that were qualified for Small Business Innovation Research (SBIR) grants from the NIH are invited to apply to the fund. The fund will be managed by Altitude Lab, a Salt Lake City-based, non-profit, life sciences accelerator that Recursion set up five years ago.
“SBIR grants are near and dear to my heart,” Gibson said. “The first thing I did when we started Recursion was write an SBIR grant, and we got $1.46 million from the federal government.”
That 2014 funding helped Recursion create its dataset, which formed the basis of its machine learning algorithm and drug discovery platform, Gibson said. Since then, the company has raised multiple rounds of venture capital from investors such as Lux Capital, Menlo Ventures and Felicis, and went public in 2021. Recursion’s current market capitalization is over $4 billion.
Gibson said he hopes the fund “will fill the gap” for new biotechs during this period of uncertainty around NIH funding.
“Early science is super risky. It’s hard to know how these companies are going to turn out, but companies funded with SBIR grants are dramatically more likely to go on to be able to raise private money,” Gibson said.
The fund will also help grow the biotech ecosystem next to Recursion. The startups will receive 12 months of office and lab space at Altitude Labs facilities.
“We’re creating our own mini-Cambridge here in the streets of Salt Lake City,” Gibson said.