Pick of the bunch
Ian Bolland sat down with Michael Anstey and Robert Tansley, Partners at Cambridge Innovation Capital (CIC), to learn more about its involvement in local Life Science companies and its strategy for investment.
CIC is a venture capital firm driven by an initiative from the University of Cambridge. Though independent of the university, Anstey highlighted that the company is in a privilleged position within the the technology ecosystem in the area, and it isn't just limited to life sciences, but described medical devices, diagnostics, and therapeutics as a key pillar for CIC's investments.
Explaining more, Anstey said: "Our objectives and our goal is to provide growth capital to IP rich, knowledge intensive companies that have a direct link to the Cambridge ecosystem. That direct link could be a spin-out from the University but the other could be a company that has a meaningful presence in the Cambridge ecosystem.
"The common thread of all our companies is this knowledge-rich, IP-intensive nature of companies, but in terms of sectors we invest broadly. We invest in life sciences and healthcare companies, that of course includes therapeutics - both platform and single assets - but it also very much includes medical devices and diagnostics."
Though CIC is independent of the University, there is an element of interdependence. The University of Cambridge has a subsidiary called Cambridge Enterprise, and CIC works closely with the seed funding strand of the organisation as it inherits the pre-emption, follow-on investment rights in university seed fund investments. CIC is provided with the right to co-invest with university seed funds and has access to information on university IP generation.
"We directly benefit from the investments that Cambridge Enterprise does by taking on the pre-emption rights of the University in the follow-on rounds. the University's deal flow is incredibly string and gets stringer every year. At the same time, Cambridge Enterprise looks to us for growth and for growth capital. this is not a situation where CIC is the only investor Cambridge University spin-outs. We are one investor but often the lead investor, and often the catalyst to rounds that come together in these follow-on rounds."
There have been several success stories to emerge from CIC's investments in Cambridge affiliated companies - notably CMR Surgical following the development of its lightweight, versatile and flexible Versius surgical robotics system which is now competing with Intuitive's Da Vinci system. Sense Biodetection has also been able to launch a new class of diagnostic product - an instrument-free molecular test that combines the performance of laboratory testing with the benefits of disposable immunoassays. Pre-pandemic its focus was flu, but it managed to pivot its offering to COVID-19 following the outbreak, and is currently looking at entering other disease areas.
Tansley explains that CIC was set up to provide capital and support for companies to grow fulfill their potential and acknowledged that medtech and diagnostics have not ben able to traditionally attract the capital to compete on a global scale.
"The observation in Cambridge was there was a good seed fund, but there was that chasm of financing to actually be able to scale a company to become competitive globally.
In the last seven or eight years we've invested over £200 million but our 32 companies have attracted over £1.5 billion of co-invest. So, how do we affect the wider organisation? I think part of it is crystallising the access to capital to allow earlier stage businesses to attract the capital they require for them to potentially grow. We're not the only investor but because we're on the ground and know the companies intimately, we're able to catalyse that additional investment which is required from these companies."
"The disadvantages that medtech and diagnostics have had could be because of factors including low levels of reimbursement in the U.S. and Europe in particular, and the requirements for companies to exit in order to access the sizeable distribution and marketing networks associated with large companies. "
Tansley continues: "Often the distribution costs for medtech and diagnostics are huge and for small companies it is very difficult for them to build up the network to achieve it themselves therefore exits to larger companies is an important pathway."
"What we've seen is a consolidation of a number of large medtech companies, through M&As, so the potential number of medtech acquirers of new companies is reduced and inevitably creates a buyers' market which again suppresses the potential returns."
CIC only focusses on products which are truly innovative, truly differentiated because I think that's the only way you will get that reimbursement and attract the attention of acquirers. I think that is the trend, it pushes everything towards innovation because you need to have that differentiated position.
"If we can do anything, and I wouldn't want to overstate our role in it, perhaps i would open people's eyes to heir potential and if they have that ambition, share that ambition. We're not alone and we're just one element in that. It's jus one small element but I think that we're ambitious and it feeds into our companies as well."
Anstey feels that CIC can also take a hands-on approach with companies and the diverse set of experiences within the firm allows them to provide advice to commercialise innovations, building upon the world-leading science behind the products within the ecosystem.
He added: "In my previous career I was advising multinational medtech companies on reimbursement, regulatory strategy, on going to market, on product launch. the reality is you can have a fantastic product but without thoughtful consideration of hose very certain aspects it'll never succeed and there won't be a viable company there. Some of the value we do bring is helping companies navigate that path and prioritisation of reimbursement, regulatory and commercial launch."