Portal’s Vertical Integration Push Seeks To Build New Labs In Growing Hubs

A Chicago-based venture capital firm, Portal Innovations, is seeking to expand its footprint in lab real estate with what could be viewed as a vertical integration approach. The firm calls it “crafted capital” — providing firms with seed capital, access to wet lab space and management mentorship to help add to the value of its investments.

The firm took this approach in part out of necessity, founder and CEO John Flavin said. Chicago biotech companies could tap into research from local universities such as Northwestern University and the University of Chicago, but lacked biotech startup infrastructure. 

“I became very interested in trying to help the ecosystem in Chicago become more robust, because I felt like, if I can improve the ecosystem, I can continue to do the things that I enjoy doing, which is to build biotechnology companies,” Flavin said.

The firm, which in May raised $100M, operates a 50K SF space in Chicago’s Fulton Market, where 35 companies it has invested in now operate. It is partnering with Trammell Crow and Beacon Capital to build out new space in South Boston, Atlanta — 35K SF in the Science Square Labs development set to open in 2024 — and Houston.

Portal’s expansion comes at a time when venture capital spending on biotech has been lower than recent boom years, leading to more private funding of firms, and general uncertainty in the market has caused some to speculate that up-and-coming life sciences markets may need to revise growth projections.    

From Portal's perspective, it is true that the biotech innovation ecosystem is distributing across the U.S.' top research institutions, and there will always be the hotspots. But more and more, the individuals who would be working and spinning out startups at the Massachusetts Institute of Technology and Stanford are now doing research at the University of Chicago or Vanderbilt.

If they had the infrastructure to stay local, instead of having to export their ideas, they would stay and build the community and local biotech ecosystem. Creating the opportunity for that shift offers developers an opportunity, and Flavin is already scouting out additional markets for expansion. 

“I believe in the model of investing in these startups and then seeing these companies grow within these buildings would provide increased returns for the developer and for the investor,” Flavin said.

Portal’s push into Houston and Atlanta in particular is an attempt to replicate how existing ecosystems have formed. Like others who have looked at these two cities, he sees strong scientific research coming out of places like Georgia Tech and the Centers for Disease Control and Prevention and Houston’s Medical Center. Creating a real estate and related venture capital arm can help support significant growth in these areas, which already have the talent, as well as a better cost of living and cheaper operational cost than coastal markets. 

“I want to build the next Boston, so there's a pride not only in the companies they are building, but there's somewhat of an entrepreneurial pride they’re also building in the ecosystem,” he said.