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Investment in Scottish Life Sciences: A Brave New World?

Posted on Oct 16, 2012 by Dr. Julie Nixon  | 0 Comments

It was a pleasure last week to attend the Scottish Life Science Association Member’s meeting on Finance and Investment followed by their annual dinner.

 A distinguished panel of investors discussed the main issues in translating the wonderful life science research we have here in Scotland into commercially successful companies. There was some disagreement on whether a funding gap actually exists for early stage companies, but there was consensus that the traditional funding model of repeated rounds of investment leading to an IPO was “broken.”

Among the panellists was the highly engaging Andy Richards of Cambridge Angel Group who challenged the perception of the funding gap, suggesting more sources of finance exist in the UK than ever before. He suggested the grim statistics provided for Biotech financing in the UK are wrong, sometimes deals are not picked up due to publicity shy investors.

Dr Louis Nisbet of Kurma Biofund disagreed on the point there is no funding gap, but agreed with Mr Richards that entrepreneurs need to be well networked and know which investors are interested in their particular business model. This matchmaking is vital.  Dr Nisbet reinforced the point that for companies to be attractive to investors they need to stay “lean and mean” with less focus on building large management teams and more focus on the project itself. The best returns are achieved with the smallest and shortest investments, with exit opportunities typically within a 3 to 5 year window.

All the panellists agreed that Scottish life science industry had a huge amount to commend it. Our science is clearly world class and we have excellent support structures provided by the likes of BioQuarter and BioCity which provides early stage companies with networking/facilities/financial and legal services to allow focus on the innovation to grow, as well as providing an ecosystem attractive to investors.

During the stimulating Q&A session the need for good senior management was stressed.  It was also noted that it takes time for any region to grow economically and that unlike IT, Biotech is a much longer business model to invest in.  However Scotland has all the ingredients to make a real name for itself on the global stage.

The dinner was an entertaining and thoroughly enjoyable event, the highlight of which was the address of Dr Gerald Chan, the founder and CEO of private equity and VC investment firm Morningside Group, someone with a tremendous track record of investment in life science companies .  He rounded off his speech with the thought provoking challenge that university IP should belong to the public, on the basis it was public money that funded the research that produced the IP.    The perennial issue of how best to align the interests of the university with those of a new company in relation to IP ownership is a subject I have blogged about previously.

Both the panel meeting and the dinner were extremely enjoyable and very well organised events.  I can’t have been the only one to come away with a more enthusiastic view of the capabilities of the life sciences industry in this country.  Great credit goes to the Scottish Life Science Association, who is doing a tremendous job in being the voice of the life sciences industry in Scotland.  The quality of the speakers and guests was testament to how far they have come in such a short time and I look forward with great interest to attending their events in the future. In the meantime here’s hoping some budding life sciences entrepreneurs will have been inspired by the many words of wisdom and encouragement from the experts.

Julie Nixon

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