LONDON – Cambridge Innovation Capital (CIC) has raised £75 million (US$98.3 million) in an oversubscribed private placing and announced plans for an IPO within the next 12 to 18 months.

The money will be dedicated to spinouts from Cambridge University and to companies in the Cambridge, U.K., area.

CIC will invest in post-seed rounds and intends to provide long-term support, said Vic Christou, CEO. "Typically, we will put in £2 million to £5 million in single tranches and up to £15 million to £20 million overall into businesses that are growing and which we like," Christou told BioWorld Today.

Unlike traditional fixed-term venture capital funds, CIC is structured as a public limited company. That means it does not have to invest over a certain time span and then look to exit. "We will support companies to maturity, allowing businesses to grow at the rate that is optimal for them," said Christou.

If exits come along, and make sense, companies will be divested. However, the expectation is that CIC will remain invested for five to 10 years.

CIC was set up by Cambridge University in October 2013 to provide growth capital for its spinouts. At that point it raised £50 million, of which £33 million has since been invested in 13 technology and health care companies.

Despite having the backing of heavyweight investors including Woodford Investment Management and Lansdowne Partners, the university made the biggest contribution to the £75 million placing and remains as the largest shareholder in CIC.

It is intended the capital now in hand will be invested within the next 24 months. "It was decided some time ago that £75 million was the right amount for this placing. We can deploy that in two years in a meaningful way," Christou said.

Further capital will be raised on going public sometime in the next 12 to 18 months. Christou said the exact timing and amount raised will depend on market conditions.

CIC will invest in technology and health care. There is no prescribed allocation between the two sectors, rather the intention is to invest in the best companies. "There will be fewer health care companies in the portfolio, but we will make larger investments in them. The weight of investment will be two-thirds health care to one-third technology," Christou said.

"Cambridge is a real hotbed of activity for health care, so I'm really excited about the prospect of building big companies in Cambridge, with capital from Cambridge," he added. CIC is prepared to support companies undertaking clinical development programs over the long term. "We are not talking about huge multi-year programs but of identifying companies with manageable programs we can fund to the end," said Christou.

MORE HYBRIDS EXPECTED TO EMERGE

The dividing lines between health care and technology are no longer clear cut, as companies in the portfolio, such as Abcodia Ltd., a specialist in biomarker diagnostics, and Cogenica Ltd., a developer of software for analyzing genome sequences and presenting the information in a clinically actionable format, illustrate.

Christou expects to see more such technology/health care hybrids emerging. "That is a particular strength in Cambridge, particularly in genomics. Health care companies like Cogenica and Abcodia are in some regards technology companies, and we are well set up to handle those sorts of businesses. It's a really interesting space, and we are able to assess and evaluate these opportunities," he said.

As the in-house dedicated fund, CIC has preferential rights to Cambridge University intellectual property coming through the technology transfer office and packaged by the university seed funder, Cambridge Enterprise.

However, Christou noted, Cambridge University is unique in allowing its scientists to commercialize their research as they like. "Academics can do as they see fit – they can go through the university's tech transfer system or not. If they choose not, we still talk to them and interact with them – we are founder-friendly."

One consequence is that technology transfer must operate as a service organization, providing a speedy route to commercialization, rather than prevaricating over valuations and slowing things down. "Because academics have a choice [technology transfer] knows it needs to provide a good service," Christou said.

Although there is currently a good deal flow, U.K. universities and science-based companies are facing a loss of grant funding as a result of the referendum vote to leave the EU, threatening future outputs. Christou said the U.K. government's announcement that it will underwrite EU-funded projects that extend beyond the point that the U.K. severs its ties is welcome. (See BioWorld Today, Aug. 16, 2016.)

However, the bigger impact of the Brexit vote will not be on research funding but on human capital, Christou said. "This is our biggest concern. In order to remain competitive we need to ensure we can get top scientists into the university and into our companies."

Getting visas for people coming from outside the EU "has always been an issue." Now, the prospect is that with the end of free movement from the EU to the U.K. this will become more of a drag. "Whenever someone required a visa it takes time and I worry there won't be enough visas available," said Christou.

Following the Brexit vote, CIC has talked to employees from the EU in its portfolio companies to reassure them of their position. Although the status quo is unchanged as yet, the uncertainty is particularly being felt by people who have brought their families to live in Cambridge, Christou said. "The issue of human capital is as important as the financial drivers; we have got to be a welcoming place."