1 March 2012
[Follows on from talk from Dr Ian Tomlinson, Senior VP, Head of Biopharmaceuticals R&D and Worldwide Business Development, GlaxoSmithKline]
Thank you Ian for the boating metaphor. For some early stage university spin-outs the extension is that we are probably not on a boat but in the water wearing a lifebelt floating some distance from the big ship.
When we first thought of running this event, it was immediately obvious that this space matters for the UK and for academia. New industries and new markets need to be created. Today has been the proof of the pudding of what might be possible. I have loved it. But it is a tough time for biotech.
In summing up I can only skim across the day.
From David of SR One we heard about the management deficit. It is essential that we address this deficit. There is plenty of management talent in running a business in the UK, it is visioning a science into a business model, growing a business from zero and raising funds that is the management deficit.
We heard of SR One as a scientific crow's nest and I liked that term and also that the “science has to make sweat run down the back of your neck”.
I welcome the potential move by SR One into the university sector with light burden funds for the killer experiments.
There are lessons for public sector funders here about frictionless transactions. And looking downstream, and patiently, for success.
Convergence Pharmaceuticals - great advice - sum up your business in one sentence. If it takes 10 minutes it is too complex.
The need for an agile network of advisers. When you are in small biotech everybody in the company knows the portfolio - a benefit of small.
From Jeff Errington we heard about the huge highs and the depths of despair and the need for agility in getting spin-outs out of universities. We need people like Jeff to succeed.
We heard from the NIHR and TSB on some of the latest public interventions in technology development. Contributions from the floor underlined how complex this landscape is for smaller companies. It is complex for universities as well.
I think it is wise to target funding but for early money it is really important not to over-manage the process of securing it.
PraxisUnico is working with TSB and the research councils to enhance communication around the new Catapult centres. It is essential for the UK that we make it easy for great ideas from young companies to gain access to these schemes and that the entry burden is as low as possible.
We had the benefit of a tax presentation from Colin Hailey, Confluence Tax.
Thank you Colin. R and D tax credits - the “dumbest money around” and I hope you are all ensuring you get access to your 25 pence in the £ and are ready for the change in April.
There are over 1400 actively trading university spin-out companies in the UK and over 50 of these have gone to trade sale or IPO since 2003 generating a capital value of over £14bn. Many of these are bio and healthcare. There are many more waiting in the wings.
Now add the fact that universities having not been doing this for that long and then add the spin-out dimension from corporates and we have a healthy and vibrant community in the UK. We need to provide a very clear focus and mechanism for this community to be heard, which leads nicely to Martino.
Martino called for greater coordination in the UK, for sharing your deal flow and networks. I would echo this wholeheartedly. We all need to work relentlessly to recognise there is more to gain from collaboration and from remorseless networking. Forget the legal agreements - being seen as a trusting partner is critical. I read recently about the early days of silicon valley and the key seemed to be mentoring from those with management and investment experience to those without. Only with that commitment to share from experienced entrepreneurs and businesses will the future be brighter in the UK than the past.
Jeff Skinner then lead an excellent discussion after lunch.
Even though he did not like the phrase, Tim Edwards said there is a ‘valley of death’.
The market for funds is tougher than it was. The fault of too much b&*£*it in the early 2000s.
The British Venture Capital Association annual report states that only £313m was invested in 2010 in seed to late stage venture capital in the UK by their members. This represented only 4% of total funds invested by BVCA members.
The investment was made in 397 companies - you can do the maths. Less than £800k per company.
So not enough money to succeed per company and probably not enough money to fail well.
Chris underlined that there is a market failure here. But I think the national public sector interventions to address the valley of death, through both European and national funding, are too cumbersome, too clumsy - often driven by unrealistic outcomes. We await the findings of the government select committee on the valley of death with interest.
We heard that the Lachesis fund is almost green - as someone who was in at the start of that fund I am really pleased.
PraxisUnico has campaigned over many years for another injection into university challenge which created Lachesis - Never has the need been greater.
Andy Sandham said that part of the reason is that too many businesses sell too soon and therefore investment realisations are lower and therefore VC investment is not attracted. Tim advocated a new investment model with a lower multiplier at maybe three to four x.
There yet again seem to be lessons to learn from the US. There is no difference in fund structures across the pond, and no difference in the quality of management but the nature of seed funding in the US and the connections between seed funds and VC has been much more productive. This is a critical space for the UK.
There does seem to be a general call for a new model. And the idea suggested by Simon of more partnerships between academia and biotech is certainly something I am seeing evidence of at Newcastle University. The need for the academic part of Malcolm's triangle to continue to adapt and respond again has never been greater.
Finally, I would like to Thank all of the speakers and the PraxisUnico and GSK teams for all the hard work that went into organising the event.
I would like to pay particular thanks to Malcolm Skingle for all his efforts putting together this event.
Thanks also to our partners and sponsors TSB, GSK and Stevenage Bioscience Catalyst. It has been a pleasure for PraxisUnico to deliver this event. As a membership organisation we welcome both private and public sector partners, so please check us out.
So to wind up.
Malcolm Skingle once had a dream. Out of the window of his old office, above us in this very building, was a view to an empty site across the lake. As ever with Malcolm a couple of conversations, including with the one good guy in the regional development agency and the idea for the open innovation campus was born. I hope you will stay for the reception and tour around Malcolm's dream now made reality.
Have a safe journey home.
Click the image to view the event programme