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ANNEX D FUND PROFILE - GENOMIA
Objectives of the scheme
The objective of the fund is to commercialise university research, support spin-outs and creation of IP at Public Sector Research Establishments ( PSREs) in animal health and the life sciences.
The fund targets 5 consortium partners:
- The Moredun Research Institute
- The Institute for Animal Health
- The Roslin Institute
- The Rowett Research Institute
- The Scottish Agriculture College
The Genomia Fund works closely with the OST and the Seed Fund Initiative.
In particular, the Genomia Fund provides seed and pre-seed funding for proof of concept studies to provide demonstrators or prototypes in emerging technologies. This is accepted to be a very difficult step in technology-led businesses and precedes accessing venture capital funds - there is substantial literature in support of this view. The fund will support firms from discovery through conversion to technology and business development. Successful projects will be passed on to venture capitalists, the SCF and other sources of finance.
Finance is provided through loan and equity funding. It is envisaged that most support will be in the £50-100,000 region, with a maximum of £250,000 per project. This is only for new technology development and its commercialisation, not re-financing.
The principles according to which the Fund are to be managed are similar to those of the Edinburgh Technology Fund, an ERDF supported initiative under the 1997-99 Objective 2 programme.
Genomia will also provide business mentoring of new start-ups, financed by linked ERDF funding.
Geographical coverage
The scheme is aimed primarily at the five consortium partners based in the East of Scotland. All investments will be made in the East of Scotland Objective 2 area. They may however bring in partners in research and finance as well.
Financial resources
ERDF funding was applied for under the East of Scotland Objective 2 2000-2006 Programme, Priority 1: Strategic Economic Development; Measure 1.2: Access to Risk Capital.
The total size: of the fund is £1,091,893, of which the ERDF contribution is £327,568. The balance was provided by the DTI.
Investments
By the end of June 2006, only one investment had been made, but there is a strong pipeline and it is understood that by the end of the project, several more transactions will have been finalised. At early 2007, completed investments stand at £168,000, committed investments (subject to legals) are £350,000, committed (in principle), is £625,000. There is a further application in the pipeline for £200,000. There are therefore sufficient prospects available for the whole of the fund to be committed.
Economic targets and outcomes
Economic targets and outcomes are presented below. These targets are in ERDF form and may not be wholly relevant to a fund such as Genomia.
Table D.1: Genomia Fund - Planned outputs
Results | 2004 | 2005 | 2006 | 2007 | 2008 | Total |
|---|
Increase in sales new businesses (£m) | 0 | 0 | 0.1 | 0.2 | 0.5 | 0.8 |
|---|
Gross new jobs - women | 0 | 2 | 3 | 5 | 5 | 15 |
|---|
Total gross jobs safeguarded | 2 | 7 | 7 | 7 | 7 | 30 |
|---|
Gross new jobs created | 2 | 8 | 10 | 15 | 15 | 50 |
|---|
Output |
|---|
Total new businesses assisted/ created | 1 | 2 | 2 | 3 | 2 | 10 |
|---|
Economic outputs will help linkages to grow and develop in the Edinburgh - Dundee biotech cluster. Genomia will maintain dynamic databases of the economic impacts of its investor companies in terms of jobs and sales increases - it will report on these annually. Because it is investing at such an early stage, the full impact of the Fund's investment activities is likely to be realised beyond the date of financial completion.
Additionality and displacement
Because there is only one investment, survey data is not available. As mentioned earlier, there is a well-documented case supporting the view that there is a gap in the market for the type of activity Genomia is to undertake. The SCF cannot provide matching funds for Genomia investments, as Genomia is funded from public sources rather than private monies.
Exit strategy
The strategy is to exit as early as possible in commercialisation phases - to release funds to be reinvested in new opportunities emerging from the target research institutes. The aim is that the Fund itself should become self-financing after 10 years (that being the length of time that it can take for such early stage investments to make returns). DTI rules required that no distributions of any kind made until its value had tripled. However, the Fund's own legal structure prevents any distributions to the target institutes. If the Fund does realise uplift in value, cash will be applied to new opportunities, including the pump priming of earlier stage R&D lines that may develop into commercial opportunities.
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