The development of a seed investment fund in New Zealand

1. The Development of a Seed Investment Fund in New Zealand
Jerry Balter
Ulysses Advisory Group
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2. Ulysses Advisory Group
• The Ulysses Group (predecessor to Ulysses Advisory Group )(“UAG”)) In
1999 we founded and ran the New Zealand Seed Fund
• $13.5 Million fund
• Formed 4 companies:
1. Neuren – neuro drugs and devices mainly developed from growth factors – IGF and
HGH
2. Pacific Edge Biotechnology – diagnostics and drugs focused on cancer genetics
3. EndocrinZ – drugs for metabolic disease, merged with Neuren
4. Esphion – Anti- virus software. Sold to Israeli software company
• Neuren and Pacific Edge Biotechnology remain the 2 largest publicly traded
biomedical companies developed from NZ science and technology
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3. The Development of a Seed Fund
• Ulysses began working with the MRC Collaborative Center in 1992
• The MRC (Medical Research Council) is the equivalent of the US NIH.
• In 1994 Ulysses formed Obesys, based on MRC technology
• From 1995 to 1997, Ulysses advised the MRC on the development of
a venture capital fund whose primary objective was to invest in
technologies developed from MRC science
• Medical Ventures Management was formed in 1997 with
approximately $70 million of available capital
• MVM has raised several additional funds since that time and
decreased its dependence on MRC science
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4. The Development of a Seed Fund
• In 1994, Ulysses formed Physiome Sciences
• Physiome was the combination of cardio-physiology development at
Oxford University, Johns Hopkins University and the University of
Auckland
• Company was focused on software to develop better
electrophysiology drugs and devices
• Raised $3 million in 1996 and a total for $120 Million from 1998-2001
• JB of Ulysses was initial CEO
• Merged with a biotech company, Predix, in 2003
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5. The Development of a Seed Fund in NZ
• In 1998, NZ had a small venture capital community focused on
retailing and software, only one real success
• At that time NZ had virtually no life sciences business outside of Ag
bio – generally focused on fattening lambs and milk production
• University of Auckland had specific expertise in cardiac
mapping(Physiome) and growth factors through j-v’s with large
companies in the US and Europe( Genentech, Chiron and Pharmacia)
• Otago University had broad experience in gene markers focused on
cancers.
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6. The Development of a Seed Fund in NZ
• Ulysses began working with the University of Auckland in 1998 to
expand its opportunities with researchers working on conditions to
treat stroke and brain trauma
• In 1999, U of A and several high net worth individuals asked Ulysses
to develop a “US-type” seed investment fund to capitalize on
developing technologies in NZ
• Ulysses expanded its efforts to include the other research centers in
NZ
• Early in 2000 the NZ Seed Fund was launched with capital of $13.5
million invested by NZ individuals and several institutional investors
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7. The Success of a Seed Fund
• Ulysses as the manager of the Seed Fund financed 4 new companies
• We recruited experienced managers for all, generally experienced in the life
sciences in other places around the world who had some connection to NZ
• Ulysses transferred a great deal of industry specific knowledge to NZ, including
the expansion of licensing capabilities; the basic roadmap on how to build a
science-backed company that could compete for capital and other opportunities
with the venture backed companies developed in the US, UK, Australia and Israel.
• Often these companies in-licensed or formed J-V’s with complimentary
technologies from research institutes outside of NZ to broaden the platform
• Generally brought in other sources of capital to provide greater financial
flexibility for the companies
• Ulysses principals remained active in the management of the companies
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8. The Success of a Seed Fund
Neuren:
• Capitalized with $7.5 million from Seed Fund, and other investors
from the US, Australia and NZ
• Recruited CEO from large US pharmaceutical company
• IPO in 2005 on ASX
• Currently 2nd largest NZ non-Ag life sciences company by market cap
• Traded on the Australian Stock Exchange
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9. The Success of a Seed Fund
Esphion
• Capitalized with $2.5 million from the Seed Fund
• Software to prevent denial of services attacks
• Recruited CEO and board of directors with experience in the space
• Sold in 2003 to an Israeli software company
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10. The Success of a Seed Fund
Pacific Edge Biotechnology
• Capitalized with $5 million in 2001 from the Seed Fund and NZ
individuals
• DF served as CEO for first 3 years of Company and then we recruited
an experienced manager who wanted to move back to NZ
• Went public in 2004 on the NZ stock exchange
• Largest life sciences public company in NZ
• Selling products in Japan, Us and Europe
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11. The Success of a Seed Fund
Endocrinz
• Capitalized with $7 million in 2002
• Joint development between Seed Fund, Pfizer and NZ institutional
investors
• JB initial CEO
• Merged with Neuren in 2004
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12. Conclusions
• The most advanced VC markets for life sciences and software remain
the US, Israel and Switzerland
• Many researchers with novel products have emigrated to these
markets to take advantage of capital and the environment
encouraging start-ups
• UK and Germany have had concerted efforts over the last 2 decades
and have begun to rival the top 3 markets
• Ulysses transferred a lot of skill and knowledge to the NZ market.
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13. Conclusions
The development of a vibrant venture capital/start-up environment is
dependent on:
• Innovation & IP Protection
• Management & Know-How
• International Regulatory Compliance
• Money, Money and More Money
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14. What about Turkey?
• Has a tremendous amount of engineering related innovation
• Should be the gateway of innovation into the Middle East, Eastern
Europe, North Africa and Central Asia
• Only a modest amount of capital focused on tech innovation
• With more capital and more development should be able to recruit
Turks with managerial experience elsewhere to return home and to
develop a vibrant medical technology business sector
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