The Uniseed venture fund is shifting focus towards more later stage, less risky investments and will raise another $20 million from its university partners for follow-on capital for companies that do well after their first round of investment

The University of Melbourne, the University of Sydney, UNSW and the University of Queensland will each commit $5 million over the next 10 years to the new follow-on fund, which will make lower risk, later stage investments into companies in which Uniseed already has a stake.

Uniseed CEO Peter Devine said the new money will boost Uniseed’s equity in successful start-ups that have already received an investment from its one-year-old $50 million commercialisation fund.

“It’s a way to double down on the really good deals,” he said.

He said the new fund would help when successful investments are in their later stages and are less risky but “we don’t have as much capacity to put money in”.

Dr Devine said the follow-on fund would allow Uniseed to take up its full share entitlement and avoid seeing its equity diluted. This meant they would not drop below the equity threshold and be facing losing board seats.

“It allows us to maintain influence in these companies,” he said.

Dr Devine said that if Uniseed had previously had more capacity for follow-on investments it would have done even better from its recent successful exits, including the sale of Spinifex Pharmaceuticals for more than $US200 million (which developed a drug for nerve pain), Fibrotech Therapeutics for over $US75 million (which is developing a drug to treat fibrosis), and Hatchtech for $200 million (which developed a new head lice treatment).

New investments

Dr Devine said that the $50 million commercialisation fund – Uniseed’s third, and known as the No. 3 Fund –  had made four new investments.

The only one announced so far is a £200,000 initial investment into UK-based eye treatment company Exonate, which has licensed research from UNSW to develop a treatment for wet age-related macular degeneration using eye drops instead of current treatments that require injections into the eye. The condition is the most common cause of vision loss for people aged 60 and older.

The three other investments have links with the other three university partners in Uniseed.

The five partners in Uniseed – the four universities plus the CSIRO – each put $10 million into the No.3 Fund when it was set up in late 2015. Their contributions will be made over 10 years.

So far the fund has invested about $4 million.

Dr Devine said that Uniseed No.3 fund typically invested in more risky, early stage start-ups, taking up to 50 per cent equity.

He said Uniseed took this early stage risk to boost the chances of successful commercialisation from the CSIRO and its four university partners. This early investment helped move technology out of the lab and across the so-called “valley of death”, he said.

Source: Uniseed’s new $20 million venture fund to double down on good deals | afr.com