Australian biotech boosted by Aus$200m VC fund
This article was originally published in Scrip
Brandon Capital, an Australian venture capital firm, has closed its third Medical Research Commercialisation Fund (MRCF), raising Aus$200m (around US$155m) and marking the country's largest ever life sciences-focused VC fundraising.
The money was brought in from superannuation investors (pension funds) AustralianSuper, Statewide Super, HESTA and Hostplus. This was a major accomplishment for Brandon Capital, whose previous funds had significant government support. AustralianSuper and Statewide Super had participated in the earlier MRCF funds.
The MRCF Collaboration has an innovative structure, with more than 50 of Australia's leading medical research institutes and research hospitals being members of the alliance and providing access to Australia's latest medical discoveries, and the expertise and infrastructure to help develop them. MRCF 3 has the first right to invest in discoveries made at the partner organizations, with all the partners getting a small share of the profits if any of the programs make it big.
Around Aus$50m of the new fund will be reserved for 20-30 very early seed stage investments in promising biotech or medical device technologies. The remaining Aus$150m will be reserved for supporting the most successful of these and existing MRCF portfolio companies. Also, under the new fund structure, each of the superannuation investors have the opportunity to invest much larger amounts of capital into the most promising assets as they mature.
"We believe that there is significant potential in Australian life sciences, which has always outperformed in terms of research innovation, but has fallen short when it comes to commercializing those discoveries," said Dr Chris Nave, principal executive of the MRCF and managing director of Brandon Capital. "This failing has been largely attributed to the lack of sufficient early stage investment capital and access to hands-on investment expertise to guide the development and commercialization of these medical technologies. The performance of the MRCF funds over the past seven years demonstrates that its unique investment model has overcome these deficiencies."
Chairman of the MRCF, Alan Stockdale, added: "The unique MRCF model is proving to be highly successful. Last year's acquisition of Fibrotech Therapeutics, one of the MRCF's earliest investments, by Shire was a landmark deal for the Australian biotechnology sector."
The new fund brings the total MRCF funds to Aus$251m. The first MRCF fund was raised in 2007, with MRCF 2 (an Aus$40m fund supported by the Australian government's now closed Innovation Investment Fund Scheme) raised in 2011. Brandon also raised the Aus$50m Brandon Biosciences Fund 1 in 2008. Over the years these funds have participated in funding Australian life science companies such as Fibrotech Therapeutics, Global Kinetics, Osprey Medical, PolyActiva, Spinifex Pharmaceuticals and Vaxxas.