NZ-based $100m fund to breathe life into VC sector

The launch of what is being touted as a new NZ $150 million (AUD$140 million) Australasian life-science venture capital fund, has grabbed centre stage on the first day of the NZBio conference in Auckland.

The BioPacificVentures Fund is expected to have its first close at $100 million this week, according to executive director Howard Moore, and is aiming for a second close of $50 million dollars in six months.

Billed as the region's largest life sciences VC fund, the fund is a partnership global between life science VC inventages venture capital, New Zealand based VC Direct Capital and NZ government research organisation AgResearch.

Moore, a former exec at Nasdaq listed drug-developed Tercica, described the announcement as having "far-reaching consequences" for the life-science industries in Australia and New Zealand.

The fund will invest exclusively in life-sciences with a focus on agbiotech prevention and nutrition.

The funds largest investor is food giant Nestle, with an undisclosed sum. NZ agribusiness company Wrightson is the biggest local investor with NZ $14 million. Another major investor is the government-backed New Zealand Venture Investment fund which was established with NZ $100 million in 2001 to invest in innovative Kiwi businesses.

Inventages -- which has offices in the Bahamas, Geneva and now Auckland -- manages about AUD$1 billion exclusively for investment in life sciences globally. Erich Sieber, one of the firms Swiss-based partners, said BioPacific was invetages' first original fund. He said inventages' involvement would give the fund access to a network of top European and US food, pharma and biotech companies.

Sieber said Invetagees became interested after a visit down-under revealed "excellent" life-science research with costs half those of Europe, combined with "world-class" agribusiness and food companies like Wrightson and Fonterra. What was lacking, he said, was a sophisticated life-science VC sector, which had led to an industry in which immature companies listed on the stock-markets to raise as little as $10 million. "That's not very productive," he said.

Rick Christie, the chairman of AgResearch, said the organisation had begun exploring the possibility of generating a major agbiotech-focussed fund three years ago. "This is a biological economy," he said. "We think it's time some of the leading-edge science in this industry was given a life."

He declined to say whether there were any specific projects AgResearch would favour for funding. "We will have to fight for deals along with the others," he said. "To say we have some lined up already would be an overstatement."

Bill Kermode, a founding partner of Direct Capital, one of NZ's most successful VCs, said none of the firms early funds had invested in life science. Asked whether the fund would invest in projects that involved genetic engineering, a highly emotive topic in New Zealand, Kermode said the short answer was "not now - but not never". Nonetheless, any GE-related investment would be "along way down the track," he said.

Craig Norgate of Wrightson said the company believed the fund was critical to the future of NZ's food and agriculture industries. "There's a significant gap between research and innovation, and the marketplace," he said. He said Wrightson's investment in BioPacific had "completed the realignment" of the companies biotech interests - last year it divested its shares in local firm Genesis R&D, and also set up a trans-Tasman collaboration to develop and commercialise improved rye-grass strains.

Among BioPacific's other directors are former Cellentis exec Andrew Kelly and NZBio entrepreneur Aki von Roy.