A £50 million venture capital fund to invest in UK university spin-outs has been proposed as a helping hand for the financing of these early-stage companies.
Supported by venture capital firm Rock Spring Ventures, the fund will also have £6 million worth of investment from three Scottish universities – Aberdeen, Glasgow and Edinburgh. Rock Spring Ventures is also in discussions with a London university for further investment, according to the Financial Times.
The European Investment Fund, Scottish Enterprise and the Strathclyde Pension Fund have also committed support.
The fund aims to provide “mission-related investment” to help university spin-outs expand after initial funding comes to an end. Many in the biotech sector have complained of the difficulty in sourcing funding for the next stage of a start-up’s development.
Sinclair Dunlop, managing partner of RSV, said in an interview with the Financial Times: “The equity funding gap in the UK has got wider and deeper. We hope to support ‘under-ventured’ regions and act as a local champion as happens in the USA and elsewhere in the EU. We would like to be a catalyst.”
The fund would provide a £2-5 million investment to start-ups specialising in medical devices and biotechnology in the areas of autoimmune, cancer, cardiovascular, central nervous system and metabolic diseases, with the hope this funding would be matched by other venture capitalists. Investment would be over a five year period.
The BioIndustry Association welcomed the news, with chief executive Steve Bates calling the plans “another boost for the UK biotech sector as a whole”.
“I am pleased that Rock Spring Ventures understands the potential value of bioscience in the UK. Their £50 million investment, alongside government initiatives like the Biomedical Catalyst and changes to R&D tax credits and other recently launched venture funding initiatives, demonstrates that there is now an increasingly positive environment for start-up life science firms in the UK.
“UK biotech is a sector that is vital to the future prosperity of our country and is a key engine for future jobs and growth in the UK,” he added.
In 2011, Rock Spring Ventures raised a $100 million in the USA targeting mid- Atlantic biotech and healthcare start-ups.
Meanwhile, four new tenants – FosterCare UK, Vital Software, A4P Bio and Communicate – have based themselves at Pfizer’s former Sandwich site, now called Discovery Park.