Figuratively, of course, there is no vault. Even joking about a ‘key to the vault’ brings our CFO out in a cold sweat. Instead, this is an insider’s guide to our investment activities and what you need to know if you’re looking for life science investment.
In part two, we’ll go over how we go about selecting our investment opportunities, but for now, we’ll begin at the beginning.
Why
Since 2002, when the blueprint for Pioneer Group was laid down as BioCity Nottingham, the UK’s first dedicated life science incubator; we’ve had front row seats and seen incredible ideas, discoveries and technologies move from the lab and into the world. Sadly, we’ve seen a few that haven’t. Sometimes ground-breaking ideas don’t make it, and one of the reasons is money.
So, we set about changing that and launched an investment arm specifically for early-stage life science investments.
Investment in Life Science Ventures
We invest in enterprises tackling environmental and health challenges, the list below is inclusive but by no means exhaustive:
- Discovery and Development Services.
- Digital health/software
- Medical Technologies
- Diagnostics
- Therapeutic Platforms
Investment in early Stage Life Science Ventures
When we talk about ‘early stage’ life science ventures, we mean pre-start-ups and start-ups in the first few years of development.
There is an idea, maybe even a (working) prototype, some, if not all, of the founders may still be doing their day jobs, and the company is probably yet to receive investment.
It’s an idea that is just about to become a business. But to do that, it needs money, and if it’s a life science start-up, it may need a lot.
Which is where we come in.
Convertible Loans
We have a dedicated investment fund and invest solo in promising young ventures. The convertible loans we provide tend to be in the range of £50,000 to £200,000.
For very early-stage businesses, assigning a company valuation is difficult. So, investment is often in the form of a convertible loan; (debt) funding, that typically converts into shares further down the line, in the event of a ‘trigger’ such as a larger fundraising round. The price of the subsequently issued shares is set with reference to the new funding round; typically with a discount to reflect the riskiness of the initial investment.
Securing Early Stage Life Science Investmnet
For more established companies, we invest directly in shares, placing up to £800,000 in any one business, often alongside other investors.
Unlike a syndicate in which all invest as one, we instead bring together individual investors. Individuals who come together under our umbrella who share our belief in supporting life science entrepreneurship.
They are High Net Worth and Sophisticated investors who want to financially and professionally back early-stage life science ventures. They bring with them a huge wealth of knowledge (pardon the pun), expertise, experience and distinguished connections.
Careers, whether in the industry (pharmaceuticals, med-tech, ag-tech,) or as successful entrepreneurs who have been there themselves; they’re all too aware of the realities of commercialising scientific discoveries. They choose to take part in what’s recognised as the riskier side of investment because they can see the opportunity, and they believe in the industry.
We at Pioneer Group present them with opportunities to co-invest alongside each other and us and then run the funding round on their behalf, as the investment lead.
Identifying investment opportunities
Conducting due diligence
Managing the admin and legal
Looking after all investor/investee relationships
Pre-Investment
For the investee, we qualify potential investors as genuine investors with genuine funds and genuine interest. Investees can confidently reveal the details about their idea and successfully pitch for the funds they need.
For the investor, we qualify investment opportunities as genuine opportunities. We have a privileged position and proximity to life science start-ups that lets us spot the ‘ones to watch’. When we find a good idea led by a credible founder or team, we take notice. Our investment panel of experts then review and decide, case by case. By the time we present an opportunity, investors can feel confident we’ve done our homework. There are, of course, no guarantees. When choosing to invest in early-stage life science companies, the risk of losing an investment is high.
Post-Investment
After money has changed hands, as the investment lead, Pioneer Group becomes the point of contact between the investors and the investee. We oversee the monitoring and reporting on behalf of the collective, allowing investees to maintain only one investor relationship.
More important than the money, (yes really) are the doors which now open to these businesses because they are, officially, ‘one of us’. Part of our business collective and able to take advantage of the opportunities, support and resources they need to grow and to succeed. We are an active investor, dedicated to doing whatever we can to help them succeed. In some cases, we take a seat on the board or an ‘observer’ position; regardless, we always ensure the full force of Pioneer Group is put behind every business. And if (when) the “proverbial hits the fan”, we roll up our sleeves and help clean up the mess.
We do this, invest in start-ups via convertible loans and equity, because, as with everything we do, we want the best possible outcome for science entrepreneurs and their ventures.