Lifting the lid on fund raising
Dr Chris Doherty, managing director of Alderley Park
One of the many challenges of fundraising in UK bioscience is having to go through the process so often. CEOs sometimes feel they have to ask for money for breakfast, go back to get someone to pay for lunch and then do another fundraising round for dinner. More upfront investment would provide the resources to allow the management team to focus on the other fundamentals of business growth.
There is a school of thought that says if you never hear the word ‘no’, you are not asking for enough in a negotiation. That may sometimes be the case and it would be a mistake to believe that fund managers have bare minimum subsistence as a default operating position for any investable business. The end game is a healthy and sustainable growth proposition.
How do you get there? One of the reasons we actively support Bionow’s BioCap conference, which took place at Alderley Park on September 27, is that it provides a forum to discuss funding and connect investors with companies seeking finance. It’s the only specialist life science investment conference in the North of England. As a community there’s value in getting together, sharing knowledge and fostering a sense of the greater good.
Fundraising is a powerful part of the dynamic here - and in particular attitudes to risk. The received wisdom holds that fundraising is less arduous in the USA – that R&D based businesses can get more cash up front and the investors will stay in for longer. There’s no doubt there are more venture capitalists in the US but in my experience there are certainly biotechs in San Diego, San Francisco and Boston willing to dispute the suggestion that their fundraising grass is any greener. Whatever the reality, maturing the UK’s R&D base involves building stronger links between the people doing the science and the community backing it – and that’s where BioCap serves an important function.
As pharma has restructured over the last decade or so, giving rise to legions of SMEs at the early stage research end of the spectrum which all face funding challenges, the concept of an ecosystem has become ever more central. As in nature, ecosystems consist of many interacting components, including patients, clinicians, entrepreneurs, researchers and others. They are communities that interact together and their success involves a certain amount of interdependence.
For any R&D based business to operate well in this environment it needs to build a strong investment case – and to make that case well. VCs like to see data that explains what sets the technology apart from competitors, if available, and an understanding of a product’s mechanism of action. VCs also follow successful founders. That means fundraising without hard data is possible if a founder has built a reputation and credibility.
At Alderley Park we have developed our ecosystem to include a mentor network. Readily available and seasoned advice about how to pitch, how much to ask for, and what the venture funds are looking for in the management team, has a valuable contribution to make.
We now have over 200 businesses at Alderley Park. Many of them have benefited from the fact we have two funds on site. Being co-located has obvious practical advantages - it’s simply easier for the fund managers to get to know the management team, and relationships really do matter if you are getting into a long term business relationship.
The existing offer includes Alderley Park Ventures Limited, a £5m incubation fund managed by BioCity Group Ltd. It provides pre-seed (<£80k) and seed capital (£80 –£500k) to support SMEs based at the Park.
We also have the Greater Manchester and Cheshire Life Science Fund, managed by Catapult Ventures, which has just passed the milestone of its 25th investment since starting in 2015. It did this by completing the funding of Alderley Park-based Rinicare Limited. The investment will be used to support the commercialisation of Rinicare’s digital healthcare portfolio, which uses artificial intelligence and machine learning to improve medical outcomes while reducing costs in a number of emergency, intensive, primary and community care settings.
The fund’s 25 portfolio companies are spread across all the life science sub sectors: Pharmaceuticals (3), Biotechnology (4), Diagnostics (3), contract research organisations (CRO) (1), Healthcare technologies (9) and Medical devices (5).
There are other funding routes available, particularly for start-ups, including the North of England Life Sciences Accelerator (NELSA) which is supported by a group that includes Alderley Park and is looking for early stage businesses and those with a business idea in the life science and healthcare sector.
We certainly believe there’s a strong case for more support to help deliver the Government’s life science strategy – and we are part of a group that is advocating for the creation of a new North of England Life Science Fund. Watch this space.