from Oliver Twist by Charles Dickens, 1838
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When £800m is not enough
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Ten years ago, I signed an agreement between the University of Oxford, its Technology Transfer company (whom I was signing for), and a new investment company Oxford Science Innovation, since renamed Oxford Science Enterprise (OSE).
OSE first raised £320m, and quickly went on to raise a staggering total of £800m; all to be invested in spin-out companies from the University of Oxford, and Harwell and Culham Laboratories. Problem solved it may have appeared at the time, but no it turns out ...
A few weeks ago, I listened to a fascinating podcast with Pete Davies of Lansdowne Partners, one of the small number of people who actually made OSE happen (https://www.moneymazepodcast.com/curated-podcasts/peter-davies ).
It turns out £800m is not enough, because the successful spin-outs now each need to raise let’s say $100m to grow on; so Lansdowne want to raise more money into a new Fund to take the really exciting companies to the next stage. Great news.
“What we’re going to do with the new Fund is find about 10 companies, and if you said What is the sweet spot for the Fund ... where systemically there’s both a lot of opportunities and it is not done properly today, is there’s a lot of companies trying to raise $20m, but if they raised $100m they would have a real chance of competing and scaling up, but $20m never quite gets you there. And that’s the sweet spot we want to play in. Our aim for the Fund is to find about ten of these over the next three years, lead the investment round, and work with our Fund investors, and get $10-15m from us and another $30-40m more from the people we are working with.” – Pete Davies, (minute 12 on the podcast).
Plus ça change ... plus c’est la même chose:
As Damon Buffini wrote in the Patient Capital Review back in 2017: “In recent years, the UK has made great strides in growing a vibrant start up ecosystem spanning a broad range of sectors across all regions. However, it is also clear that the challenges faced by high potential businesses seeking to scale up are substantial. In particular, accessing long-term, patient finance is difficult in the UK’s under-developed and fragmented ecosystem. If left unaddressed, this will continue to stifle the rich pipeline of UK start-ups coming to fruition and will see the UK lose out on the jobs, skills development, talent, technological know-how and other economic benefits they could provide”.
Maybe the Lansdowne private money can really make it happen this time.
There are funding gaps everywhere along the science commercialisation pathway – funding the research in the first place; proof-of-concept funds to support projects pre-deal; early-stage venture funds (for the many universities not yet attached to one of the big funds, OSE, CIC, Gritstone etc). And now the recognition that there is a shortage of development capital in the UK, that the UK fails to back the really exciting companies so they can scale and remain in the UK longer.
Please, sir, may I have some more please?" - from Oliver Twist, by Charles Dickens, 1838
OSE first raised £320m, and quickly went on to raise a staggering total of £800m; all to be invested in spin-out companies from the University of Oxford, and Harwell and Culham Laboratories. Problem solved it may have appeared at the time, but no it turns out ...
A few weeks ago, I listened to a fascinating podcast with Pete Davies of Lansdowne Partners, one of the small number of people who actually made OSE happen (https://www.moneymazepodcast.com/curated-podcasts/peter-davies ).
It turns out £800m is not enough, because the successful spin-outs now each need to raise let’s say $100m to grow on; so Lansdowne want to raise more money into a new Fund to take the really exciting companies to the next stage. Great news.
“What we’re going to do with the new Fund is find about 10 companies, and if you said What is the sweet spot for the Fund ... where systemically there’s both a lot of opportunities and it is not done properly today, is there’s a lot of companies trying to raise $20m, but if they raised $100m they would have a real chance of competing and scaling up, but $20m never quite gets you there. And that’s the sweet spot we want to play in. Our aim for the Fund is to find about ten of these over the next three years, lead the investment round, and work with our Fund investors, and get $10-15m from us and another $30-40m more from the people we are working with.” – Pete Davies, (minute 12 on the podcast).
Plus ça change ... plus c’est la même chose:
As Damon Buffini wrote in the Patient Capital Review back in 2017: “In recent years, the UK has made great strides in growing a vibrant start up ecosystem spanning a broad range of sectors across all regions. However, it is also clear that the challenges faced by high potential businesses seeking to scale up are substantial. In particular, accessing long-term, patient finance is difficult in the UK’s under-developed and fragmented ecosystem. If left unaddressed, this will continue to stifle the rich pipeline of UK start-ups coming to fruition and will see the UK lose out on the jobs, skills development, talent, technological know-how and other economic benefits they could provide”.
Maybe the Lansdowne private money can really make it happen this time.
There are funding gaps everywhere along the science commercialisation pathway – funding the research in the first place; proof-of-concept funds to support projects pre-deal; early-stage venture funds (for the many universities not yet attached to one of the big funds, OSE, CIC, Gritstone etc). And now the recognition that there is a shortage of development capital in the UK, that the UK fails to back the really exciting companies so they can scale and remain in the UK longer.
Please, sir, may I have some more please?" - from Oliver Twist, by Charles Dickens, 1838