SCOTLAND’S life sciences firms have been urged to be more ambitious by raising their pitch for funds from elow £1 million to up to £20m, according to a senior figure in the industry.
Glenn Crocker, chief executive of BioCity, which runs the incubation centre on the former Merck drugs factory site in Newhouse, Lanarkshire, will tell the first BioScotland conference on Tuesday that businesses need “bigger aspirations”.
Crocker told Scotland on Sunday: “Where there’s been an issue in the past with the Scottish environment is that everything is done on a shoestring, with a bit of grants and a bit of angel money.
“It never gets to that critical mass of investment. We should be putting in £10m or £20m into companies rather than £500,000 or £1m.
“If you have those sums of money then you attract the best people and companies can grow. We have to break the cycle: poorly funded companies never attract the right people or venture capital.”
Crocker praised the arrival of Rock Spring Ventures, which is raising a £50m fund to support companies.
He said it was positive that Scottish Enterprise and several universities were investing in Rock Spring’s fund.
Crocker added: “We shouldn’t spread funds too widely. Focusing on a few big winners is better.
“There’s always a danger of being too fair. Life isn’t fair, there are winners and losers. So unfortunately that means some businesses won’t get funded, but that’s OK, I think.
“Companies need bigger aspirations. They need to expect to raise £10m or £20m and not feel constrained by the current environment.
“It becomes self-fulling: if you’ve got a situation where you can raise £500,000 or £1m then you end up creating business plans that only need that amount.”
BioCity launched its first site, at a former Boots factory in Nottingham, in 2003 to provide accommodation and support to firms. It expanded into Scotland in January 2012 in partnership with the Roslin BioCentre by taking over the Newhouse site.
Rhona Allison, senior director of life sciences at Scottish Enterprise, said: “We recognise there is still a funding gap and we’ve been attracting pharmaceutical companies’ venture capital arms to Scotland to look at investments.
“We’re keen to get the right amount of equity funding for companies so they can create value for shareholders.”
Sinclair Dunlop, managing partner at Rock Spring Ventures, said: “I would certainly agree companies developing therapies or bio-pharmaceuticals should be looking at the £10m or £20m mark, but there are some medical device makers that can achieve results with smaller amounts.
“We’ve been delighted with the quality of the companies approaching us and we’ve started doing due diligence.”
Scott Johnstone, chief executive of the Scottish Lifesciences Association (SLA) trade body, said progress was being made in filling the funding gap, pointing to Morningside Ventures’ participation in NuCana BioMed’s £6.7m fundraising in 2011, and Lamellar Biomedical raising £3.4m last year from East West Capital.
“The SLA is running training sessions to help companies raise their aspirations in a realistic way,” he said. “I’d like to see more money and more firms getting money.”