Trans-Atlantic VC banks $126M to scout startup ideas out of 'underventured' areas in the UK
The global glut in biotech venture dollars is fattening more than just the traditional hubs — at least Epidarex Capital hopes. The trans-Atlantic fund also has $126 million (£102.1 million) to prove it.
Sinclair Dunlop and Kyp Sirinakis, the co-managing partners, planted their US headquarters just outside of the NIH in Bethesda, MD 10 years ago in a direct shoutout to the focus on “underventured” areas. For this third, UK-focused fund, the thesis remains the same: to bring scalable specialist life sciences capital to regions where not that many VCs are willing to go, at least for seed or Series A deals.
Pennsylvania, the Carolinas, Florida and even Texas are “great examples of where you have multiple world-class institutions but actually a lower number of specialist VCs targeting the sector than you had in those locations 10 years ago,” Dunlop told Endpoints News. “So the almost overconsolidation into Boston has opened up opportunities in many of these places.”
The same is true for the UK, where the spotlight on the London-Cambridge-Oxford Golden Triangle is blinding out bright researchers in cities like Manchester, Glasgow and Leeds. Or Epidarex’s British home of Edinburgh.
World-class science, after all, comes before everything. But finding the ideas requires digging in, walking the halls of schools and getting to know the PIs as well as their young protégés and rising stars to gauge what’s cooking.
“It might be rough, it might be raw, but it’s shapeable,” Dunlop said. “If the science is fundamentally sound enough, that’s what we do. We don’t mind rolling up our sleeves and getting very involved with these academic founders even if there’s not a business plan in place. We start from scratch, and we’re OK with that.”
He cites two main ingredients that are equally crucial to making a region fertile soil for startups: access to specialist capital and experienced C-level talent. In many ways, the former can influence the latter, both by tapping into their network and by offering the assurance of sufficient money to get through the initial work.
Without them, academic investigators may find industry partnerships their best options. An example is the deal Carl June, with whom Epidarex had worked together on an earlier company dubbed MaxCyte, did with Novartis, which ultimately gave birth to the world’s first CAR-T therapy.
“The question is,” he said, “were there as many company creation opportunities coming out of that as there could be?”
That could mean more jobs locally, as well as wealth that can be fed back to the research work.
Of course, there’s a reason why Boston/Cambridge and the San Francisco Bay Area are still unrivaled in popularity among the biotech and medtech circles Epidarex travels in. There are merits in clusters, particularly when it comes to attracting and retaining a workforce. Availability of real estate also varies widely, and some regions are short of critical infrastructure needed to grow.
The firm wants to play a role in creating that, Dunlop said, getting involved in brainstorming for the bioparks in the Manchester area.
Bottom line: “It’s not a fundamental gating factor. Arguably if there were half a dozen funds like us, even two or three models like us in a lot of these locations, the real estate will follow.”
Having almost doubled its size from $70 million in the second fund, Epidarex wants to cut bigger checks (to the tune of £2 to £5 million). It’s also created a new incubator to nurture ideas that might graduate into the main portfolio. All told, 12 to 15 deals should come out of the current fund — the first being a £2.65 million Series A financing for Lunac Therapeutics, a spinout from the University of Leeds.
“One of the reasons we are conservative is that we want to make sure we have sufficient reserves to double down on the winners going forward,” he said, holding as much as 200% of the initial bet for follow-on rounds when larger VCs would chime in.
The British Business Bank provided a cornerstone investment of £50 million for the fund, while the Universities of Edinburgh, Manchester, Glasgow and Aberdeen, alongside Strathclyde Pension Fund, have also bought in. Several unnamed global investors are tagging along.