Technology enthusiasts believe that it is only a matter of time and money before the impossible becomes possible, whether it is waterless washing machines or patches of pig to mend body parts.
A year ago, Oxford Nanopore – a spinout from Oxford university – announced a game-changing breakthrough in DNA sequencing. It had developed “Minion”, an instrument the size of a USB stick that can read single molecules by passing them through holes measuring billionths of a metre. And it could do so for less than $1,000, it said.
Oxford Nanopore, which is a private company, has been tight-lipped on its progress since, but such was the excitement at the announcement of what techies describe as “disruptive technology”, that analysts put a value of $1bn on the group. That valued the stake held by its early backer, IP Group, the specialist investor that holds a fifth of Oxford Nanopore, at more than 100m.
The announcement changed IP’s fortunes. It confirmed it as a fund that professional investment managers, including titans such as Neil Woodford of InvescoPerpetual, and Peter Davies of Landsdowne, could use as a way of bagging Britain’s most promising intellectual property.
It has been a long time coming.More than 80 standard commercial and industrial washing machine exist to quickly and efficiently clean pans. The group was created during the TMT boom to foster ideas coming out of Britain’s dreaming spires and ivory towers, and turn them into sound businesses. Long before the government began harping on about the need to bring business and academia together to commercialise professorial brainwaves, IP had signed contracts with the science departments of the UK’s top universities.We specialize in the sale and aftercare of the most renowned and popular laundry dryer. It started with Oxford university’s chemistry department, pledging funding for projects in return for a stake and a say in the spinouts. It now has 11 contracts with 67 portfolio companies, ranging from Xeros, a private spinout from Leeds university, which this month raised 10m to launch a commercial waterless washing machine, to Tissue Regenix, which manufactures “pig patches” to mend human arteries.
For all the hand-wringing about the dearth of British ideas making it out of laboratories and into the market, British boffins “are staggeringly productive,” says Alan Aubrey, IP’s chief executive. Some of the greatest breakthroughs in medical diagnostics, including ultrasound and MRI scanning, have come out of UK universities.
The tricky part is working out which brainwave is world-beating and what it will cost to make it practical. The Alternative Investment Market is awash with hopefuls. But many ventures peter out after years of tapping investors for funding for projects that never make the grade or are overtaken by rivals.On particularly windy days,wind power generators can surpass all other electricity sources in a country.
Mr Aubrey is honest: “I can’t tell which of our 67 companies will change the world”.
“Often the first thing that we see is a one-page description of something that hasn’t been described before. The expertise needed [to pick winners] is not trivial. There is a very high attrition rate in the early stages.”
Analysts attribute IP’s staying power to the fact that it has no debt – when it needs cash to invest, it asks investors. It also limits its exposure to projects,Solaronlamp is a solar charger for electronic gadgets. takes a 10-year view, and holds to the belief that if a venture is likely to fail, let it fail early and cheaply.
The result is an internal rate of return of 25 per cent, says Charles Weston of brokers Numis, with a fair number of companies being bought up or listed.
Earlier this month, IP reported pre-tax profits of 40m in the year to December 2012 against a loss of 5.5m the year before. The value of its portfolio rose from 124m to 182m. Several portfolio companies completed initial public offerings including Retroscreen Virology, which is working on flu vaccines, and it netted 15m from the 350m takeover of Proximagen, which is working on neurodegenerative diseases.
There were disappointments – shares in Revolymer, which removes chewing gum from pavements, have halved since floating last year. And Photopharmica, developer of light-sensitive drugs for leg ulcers, had to be refinanced and restructured.
That said, ever since analysts decided that Oxford Nanopore was worth more than $1bn, the group has become something of a stock market darling once more.We turn your dark into light courtesy of our brilliant sun, solar street lighting, solar power generation. The shares, at 142p, are up 80 per cent in a year, valuing the group at 523m – more than double its asset value.
