‘Biotechs and the City’ Part 6/7 - Apposite Capital

The following panel transcript is taken from the 4th September ‘Biotechs and the City’ – Tech Transfer, Translational Funding and Start-Up Capital event held at Imperial College Incubator, and produced by Biotech and Money and sponsored by Marks & Clerk LLP.

The panel included Keith Blundy from Cancer Research Technology, Dr Allan Marchington from Apposite Capital, Tony Hickson from Imperial Innovations, Dr Mike Capaldi from Edinburgh BioQuarter, Richard Seabrook from the Wellcome Trust and Simon Portman from Marks and Clerk.

Neil Darkes: Allan Marchington is the partner at Apposite Capital. Apposite Capital is an independent investment firm focused exclusively on healthcare. Allan is charged with finding and funding early stage bioscience and seeking out opportunities emerging as a result of the NHS opening up.

A good question to start with Allan is how important is engagement with universities for yourself and Apposite in terms of finding new sources of innovation?

Allan Marchington: It’s a component. Where we look for innovation today is, yes it’s the universities, yes it’s pharma and corporate. There’s a lot of pharma already shrinking in what they’re doing and that is leaving stuff on the table that can be funded, that can be picked up very cheaply to make money and generate new medicines. More increasingly what we’re seeing is opportunities within NHS, which is interesting because 5 to 10 years ago if you’d asked me that I’d say not a chance. Whereas today there is a mind shift that is moving towards that within the NHS.

So university is a component of it. What people don’t tend to realise is early stage financing also goes in waves with a fund. So if your funds have life cycles of 10 year funds, and doing a start up in year 5 and you’ve only got 5 years left of the fund it isn’t that smart because the likelihood is you can’t exit the company before your fund finishes. So you’re really only interested in early age start-ups in the first couple of years, years 1 to 3. Thereafter it’s pretty hard to do a start-up company, believing you’re going to get an exit in the timeline. We did a start up in year 5 and that worked out really well. But it’s a difficult space. People who think about tech transfer, think about your funds, think about where they are in your fund lifecycle.

Neil Darkes: Earlier in the questioning, Terry asked a question about what investors can offer beyond more than just finance. Coming from your point of view what do you feel VC’s are able to offer up entrepreneurs over other types of capital.

Allan Marchington: I think it really depends on the VC. From our perspective I think what we can bring is experience of having been there, seen it, done it, set up companies. I’ve been a CEO, dealt with VCs, built up a company and sold it and dealt with all that sort of stuff, having no money and having a board that doesn’t listen and VCs on that board. So I’ve been there seen that. Other VCs such as corporates can bring some of that experience but also bring experience of the whole, people like SR-One brings the whole power of GSK behind them to actually give experience. Someone like Roche does the same. Somebody like Imperial innovations can reach out and touch on all the academics and those networks and the people in there who have been with other funds. So it’s really picking the VCs that are right for your business to some extent. Linked with that is also what VCs bring also is sort of mates and clubs, and it’s all about that as well. I never appreciated when I was a CEO that the quality of your VC syndicate mattered so much, and the chaos that can be on the boards of a bad VC syndicate, and how well a good VC syndicate can actually run; you never appreciate that until you’ve lived through both. I’m not going to mention names.

Neil Darkes: To finish on, we have a few starts ups in the room. But what from your point of view do you look for? What are the key indicators of a company that would make for a viable investment from your point of view?

Allan Marchington: To me it’s management. It’s management, that’s what does it every time. Having said that in a lot of cases in technology transfer there is no management in place. Then I think it’s alignment with the people who have founded the company. It’s alignment with the organisation and institution it has come from to say ‘this is what the plan is, this is the vision, do we all agree? Once people have alignment for a vision, it’s very easy to get what you think are the right people around that vision, and do they buy into that vision. Then it’s about putting in the incentives, the rewards and the opportunity in front of them to actually grow and build that. Really in those situations, if it’s all aligned, capital generally isn’t the issue. It’s really about time and moving fast enough.

Part 7a/7 – Group Q&A will be released Thursday morning. However, if you can’t wait for the release of the remaining pieces of content taken from the 4th September ‘Biotechs and the City’ event held at Imperial College Incubator and sponsored by Marks & Clerk, you can download the full transcript here including the group Q&A.

If you’d like to attend any of the forthcoming events in the ‘Biotechs and the City’ series, you can see our October and November offerings here. 

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