When drugmaker Pfizer Inc. announced four years ago it would close its massive research and development center in Ann Arbor — the home of University of Michigan — academic and government leaders were stunned at the punch in the economic gut.
Four years later, after an unlikely series of events during Michigan's long, painful recession, officials call the redevelopment of the 174-acre, 30-building North Campus Research Complex as a starting point for the state's economic recovery.
University leaders on Tuesday officially unveiled the Venture Accelerator, a business incubator for startup companies possessing promising technology bubbling up from the university's classrooms and laboratories. The incubator, which takes up a small part of the sprawling complex, has signed one company and hopes to have four more join within weeks to grow their business and commercialize their technology.
"We didn't quite know what to expect when this first happened," said university President Mary Sue Coleman. "Initially, we thought, 'Well, maybe another company will come in and snap up the property.'"
But after about 18 months, as Michigan's jobless rate rose and the recession deepened, Coleman said it became clear that nobody was going to buy it. The university worried the property might be razed and taken off the tax rolls, so officials considered buying it.
After much discussion and planning, the school bought the complex in 2009 for $108 million. In 16 months, it has gone from zero to nearly 500 employees, which includes university, business development and technology transfer staff as well as the startup companies. A specialty chemical company called Boropharm, which isn't affiliated with the university, also leases space.
The first company in the incubator is Life Magnetics, which is developing tiny, rotating magnetic beads as part of a device that can determine if someone's infectious disease is resistant to antibiotics in hours instead of days.
The company, which has received funding from both foundations and venture capitalists, is about two or three years away from the marketplace — a path its executives say is made quicker and easier by being at the incubator.
"It's called an accelerator for a reason," said Bill Wood, Life Magnetics' CEO and a serial entrepreneur. "We can focus on this," he said, gesturing to equipment in the lab. "The administrative headaches are taken care of."
The companies pay a market rate to rent space, but receive business development assistance from the university's staff and mentors-in-residence. The university will house a startup for up to three years "so they have a little speed to get out to market," said Jim O'Connell, associate director for business formation at the university's technology transfer office.
O'Connell said not all startups make it, but the support of the incubator raises the survival rate.
The research complex's executive director understands its transformation better than most. David Canter had been Pfizer's senior vice president of global research and development and remembers the pain that came with the announcement by the drug company, which had 2,000 workers in Ann Arbor and was the area's biggest private employer.
"Four years ago, people could not have envisaged what has happened," he said. "There's no sure thing about what we're doing here. . . . But there's a sense of direction, a very positive direction."