A LIFE sciences body has unveiled plans to plug the venture capital gap in Scotland by attracting £50 million of funds to the industry.
Mike Capaldi, commercialisation director at the BioQuarter – the body that brings together Edinburgh University, NHS Lothian and Scottish Enterprise – has held talks with four venture capitalists (VCs) in the past two months.
An announcement on VC money for the sector is expected early next year, with Capaldi aiming to bring in £20m of the £50m specifically for the use of firms based at the BioQuarter, which runs a science park next to Edinburgh Royal Infirmary at Little France.
Capaldi revealed that Alexandria Real Estate Equities, the California-based commercial property company, had expressed an interest in taking part in any VC funds raised by the BioQuarter.
The property firm has its own investment arm, although it said it would take part in the second rather than the first round of any fundraising.
Alexandria was brought in to build an incubator centre for early-stage companies at the BioQuarter but pulled its plans following the global commercial property crash.
Scottish Enterprise stepped in and built the Nine incubator centre instead, which is now more than half-full.
Capaldi said: “Ardana and Cyclacel are really the only two Scottish life sciences companies that were able to attract tens of millions of pounds of funding.
“To attract VCs to Scotland we need to get them excited about the opportunities available. Because we don’t have a VC scene in Scotland, there are a lot of companies that need funding, and so the first VC that sets up here will have lots of opportunities.”
Capaldi highlighted Asclepius, an “orphan” drug company being spun out of Edinburgh University.
Orphan drugs are treatments for diseases that only affect a relatively small number of people and so do not attract the attention of large drug companies. But they do attract tax breaks and funding, making them more attractive for smaller businesses.
“Companies like Asclepius will need to raise £30m, £40m or £50m,” Capaldi said.
Capaldi’s £50m target is for 2014 and includes £9.6m already raised by TPP Global Development, which was founded at the BioQuarter in 2010 by former Morgan Stanley fund manager Peter Trill and Oxford University scientist Tom Brown to commercialise university research.
As well as attracting investment, the BioQuarter is also charged with creating companies. Seven firms have already spun out from the BioQuarter since the project began in 2010, with a further 14 in its “pipeline” of businesses lined up to be launched by 2015.
Creating all those companies would mean the BioQuarter would break through its target of founding 12 businesses between 2010 and 2014.
Scott Johnstone, chief executive of the Scottish Lifesciences Association (SLA) trade body, welcomed the work being done by the BioQuarter to secure more VC funding.
Johnstone said 12 investment companies had now joined the SLA. But he warned that companies need help to pitch to investors. “Too often in the past, companies have pitched to investors with little chance of success because of weaknesses in their business propositions,” Johnstone said.
The SLA has begun running training sessions for early-stage firms to help get them ready to pitch for funding.