Life science VC funds demonstrating solid support

In a sign that life science-focussed VC activity may be picking up, Melbourne-based venture capital firm Starfish Ventures has closed its AUD$123 million Starfish Technology Fund I.

Meanwhile, across the Tasman, the $100 million Life Science Ventures fund, which will focus on food and agricultural biotechnology, is hot on Starfish's heels, and the fund's Dr Andrew Kelly is optimistic that it will close in mid-December.

Starfish Ventures' Michael Pannacio said that around 30 to 40 per cent of the fund will be invested in life science projects, with the balance being invested across other fields of technology including information and communications technology.

Starfish, which has been operating since 2001, had targeted a fund size of AUD$100 million when the fund opened in February, and the decision was made to go beyond that amount following strong support from new and existing investors.

Pannacio said 90 per cent of investors in the fund were institutions and that most investors were local. "We have 2 principal overseas [investors] -- percentage-wise they are actually quite small," he said.

The fund is the first to be established under the new Venture Capital Limited Partnership (VCLP) structure, completed by the federal government earlier this year. "What the new legislation does is allow international investors to invest into the Australian market on the same terms as they would domestically," said Pannacio.

He said Starfish had already earmarked three initial investments, which it hoped to complete between now and early February.

Agricultural fund close to close

Life Science Ventures' Andrew Kelly said investors in the fund would include institutions, corporations involved in agricultural and food biotechnology and governments. The fund is already supported by the New Zealand government, which will invest $1 for every $2 of private sector investment. And Queensland state development minister Tony McGrady announced at the recent AusBiotech conference in Brisbane that the Queensland government would kick in an additional $6 million.

"In the 1980s we were told that agriculture was an old industry, and that Australia and New Zealand had to get smart in IT. But we could only ever be followers, behind the giants of IT in the US and Europe," said Kelly.

"We have the products, the technology, the scientists, and the international marketing networks to pull off global leadership in agricultural biotechnology."