New $35m biotech VC fund launched in SA

South Australia's rapidly expanding biotechnology industry now has access to AUD$35 million in venture capital, with Bio Innovation SA securing a deal with one of Australia's most successful superannuation funds, MTAA Super.

Announcing the arrangement today, Dennis Mutton, chairman of Bio Innovation SA's board, said the SA Life Science Venture Capital Fund would be one of the largest VC funds in the state's history, and the first of its kind in Australia.

Bio Innovation CEO Jurgen Michaelis said it had taken two years to set up the deal with MTAA Super, and several other VC providers had already approached the agency with offers to co-invest in new ventures, augmenting the initial $35 million investment.

"People now believe something is happening in SA, so more money will be coming in," he said.

Michaelis said that in the short term, the new fund would provide a source of active venture capital, tailor-made for a broad range of early-stage biotechs and related enterprises being spun out of the state's research institutes and agencies.

"These companies will then be in a strong position to leverage federal government grants, so there will be strong flow-on effects," he said. "In the medium to longer-term, a number of the companies we are seeding today will make money and transform into really large, multinational companies.

"The next generation of biotech entrepreneurs is already in university today, and they will found their own companies on the back of the success of these big companies, which will be based in Adelaide."

The 10-year fund, to be managed by Terra Rossa Capital, expects to make its first investment later this year. Michaelis said investments would range between $100,000 and $1.5 million, with all decisions being made purely on a commercial basis.

"The fund will be looking for sound investments in companies with strong IP in everything from biomedical products, diagnostics, wine, agricultural biotech, biomaterials, health care, to medical devices," he said.

"We will look for good business strategies, and management teams capable of driving the new technology forward. If they need help not, we will assist through our new incubator facility, which will open in the second half of 2007 in Thebarton."

Michaelis said that two years since its inception, Bio Innovation SA was well on the way to achieving its strategic goal of establishing 50 new biotech companies in the state within five years, with around 37 new companies already up and running.

"We now have good evidence that our technology transfer processes are working, and we will now looking at new companies carefully and provide investment capital," he said. "We now have the four basic building blocks in place: infrastructure, capital, good IP, and management expertise."

During the two years it took to set up the new fund, Michaelis said the partners had investigators the major drivers for the international biotechnology industry, and overall returns on investment, and then looked at the relative strengths and weaknesses of these drivers in South Australia.

"This is a truly unique structure, which we think will set a benchmark for the super fund industry," he said. "MTAA has already done a comparable deal in the ACT, for biotech companies spun out of the Australian National University, but this is the first time the entire investment has come from the superannuation industry, without core contributions from the state and federal governments."