Lifting the lid on fund raising
One of the many challenges of fundraising in UK bioscience is having to go through the funding process so often. CEOs sometimes feel they must ask for money for breakfast, go back to get someone to pay for lunch and then do another fundraising round for dinner. More upfront investment would provide the resources to allow the management team to focus on the other fundamentals of business growth.
There is a school of thought that says if you never hear the word ‘No’, you are not asking for enough in a negotiation. That may sometimes be the case and it would be a mistake to believe that fund managers or grant-awarding authorities have bare minimum subsistence as a default operating position for any investable business. The end game is a healthy and sustainable growth proposition, as well as advancement to a tangible value inflection point.
How do you get there? One of the reasons we support Bionow’s BioCap conference, which takes place at Alderley Park on October 3, is that it provides a forum to discuss funding and connect investors with companies seeking finance. It’s the only specialist life science investment conference in the North of England. As a community there’s value in getting together, sharing knowledge and fostering a sense of the greater good.
Attitude to risk is one of the most powerful dynamics in fundraising. The received wisdom holds that the whole process of raising money is less arduous in the USA – that R&D based businesses can get more cash up front and the investors will stay in for longer. There are undoubtedly more venture capitalists in the US but in my experience, there are plenty of biotechs in San Diego, San Francisco and Boston willing to dispute the suggestion that their fundraising grass is any greener. Whatever the reality, maturing the UK’s R&D base involves building stronger links between the people doing the science and the community prepared to back it – and that’s where the BioCap conference serves an important function.
As pharma has restructured over the last decade or so, giving rise to rapid growth in the number of SMEs in early stage research, developing a strong investment case has become ever more important. VCs – and grant funders - like to see data that explains what sets the technology apart from competitors, if available, and expect a very precise articulation of a product’s mechanism of action. VCs will also follow successful founders. That means fundraising without hard data is possible if a founder has built a reputation and credibility.
The Alderley Park Accelerator runs a variety of programmes to de-risk early-stage and existing companies in order to help them to grow sustainably and deliver new innovations to the market efficiently and successfully. Key to this is being able to deliver a cohesive and succinct story, and our programme helps participants significantly refine and develop their “pitch” from day one. This is equally as vital for commercial grant funding as any equity funding streams – a blend of which is optimal for many companies. Within their Accelerator journey, participants are introduced to experts from the Expert Mentor Network of over 250 senior industry professionals. The combined support of the programmes, 1-to-1 coaching and mentoring speeds up their development journey and frequently enables further funding rounds to go more smoothly.
Managed expert networks are used at the world’s very best innovation clusters and are often the difference between success and failure for many companies and the Alderley Park Accelerator Expert Mentor Network is an invaluable asset to our community. Readily available and seasoned advice about how to pitch, how much to ask for, and what the venture funds are looking for in the management team undoubtedly makes a valuable contribution to companies with limited resources.
There are now over 200 businesses based at Alderley Park. Many of them have benefited from the fact we have two funds based here and provide a significant level of business support. Being co-located has obvious practical advantages - it’s simply easier for the fund managers to get to know the management team, and relationships really do matter if you are getting into a long-term business relationship, which are so important in funding situations.
The funds available include Alderley Park Ventures Limited, a £5m incubation fund managed by BioCity Group Ltd. It provides pre-seed (<£80k) and seed capital (£80 –£500k) to support SMEs based at the Park. APV has investments in 7 companies on-site, including Kinomica, who have relocated from London to Alderley Park to take full advantage of the science and commercial ecosystem here. Over the past year, Kinomica have been supported by the Alderley Park Accelerator programme, which has been transformational in the development of their business model.
We also have the Greater Manchester and Cheshire Life Science Fund, managed by Catapult Ventures. Its many and varied investments include the funding of Alderley Park-based Rinicare Limited. The investment was deployed to support the commercialisation of Rinicare’s digital healthcare portfolio, which uses artificial intelligence and machine learning to improve medical outcomes while reducing costs in a number of emergency, intensive, primary and community care settings.
We certainly believe there’s a strong case for more support to help deliver the Government’s life science strategy – and we are part of a group that is advocating for the creation of a new North of England Life Science Fund, as well as pushing for further public money to advance innovation more efficiently. Watch this space.
https://bionow.co.uk/event/BIONOW2017/2019-biocap-conference