Matt's Investments Blog

Solving the puzzle

Matt Mead - 10.11.2010

Medtech investing is tough - it's tough technically, regulatorily and commercially.

It's tough because many investors have moved out of the early stage market and it's tough because the time to market can be immense.

All of this means that you have to be very careful picking businesses to back when you invest in life sciences and it is rare to find a business that has all the pieces of the puzzle neatly in place.

Enter Venture Capital

This is partly where Venture Capital comes in to its own. So much of venture investing goes under the radar and is about pulling the pieces of the puzzle together pre-investment to make sure that a business is built on firm foundations post-investment.

Sirigen

As an example we've just invested in a company called Sirigen* and here are the pieces of the puzzle that they came with:

- Great technology (the technology is a based on chemistry developed at UCSB in the 1990s, for which the scientists were awarded the Nobel Prize for chemistry in 2000) and, crucially for Medtech investments, the technology is backed by a very strong and well-developed patent portfolio.

- Large market opportunity ($12billion life sciences industry and $35 billion diagnostics industry), the technology has breadth in that it works with a wide range of existing technologies and instruments that are already in the marketplace today.

The missing pieces:

• The key was to build an investor syndicate with sufficient capital to fund the business properly going forwards.
• We worked with Company to help bring in other new investors (IQ Capital and YFM Private Equity) alongside existing backers OCP and Seraphim to get the investment round size up to the required amount. We have seen too many great managment teams spend the majority of their time looking for the next round of funding rather than concentrating on building their business – it is well worth putting in the time to get the syndicate right from the beginning with deep enough pockets to support the company, and with aligned interests to give a clear steer on the strategy.
• We and the Company have added additional diagnostics industry expertise to the Board. Both David Evans and Arthur Cole complement the existing impressive team and provide more practical experience of commercialising new diagnositic companies through to exit, which is the ultimate goal for any investor.

This business is at a relatively early stage in its development but is addressing a very big market with a potentially world-beating technology. We have enough of the puzzle completed to give us the confidence to make an initial investment – now the real work begins.

Sirigen announces the completion of financing worth 3.83m and new directors.


*Sirigen has developed a high sensitivity fluorescent labelling technology that dramatically increases the sensitivity of existing diagnostic tests that currently have to detect very low levels of biological targets (e.g. proteins, DNA, bacteria). Example tests that can be improved with the Sirigen technology are those for analysis and management of diseases such as HIV and leukaemia. This is an enabling technology with broad applications – by making the tests more sensitive, it can improve the results and quality of existing diagnostic tests, and it also has the potential to allow new diagnostics tests to be developed which today are not viable.