MVM anticipates raising £40 million on the initial closing of its second fund, which ultimately hopes to raise £75 million. The UK-based life science investor will invest the new fund in start-up and early stage companies in the UK, Europe and US.
MVM currently manages the UK Medical Ventures Fund, which raised £40 million in 1998. The change in the name of the fund highlights that MVM is happy to invest anywhere in the world.
The first close represents commitments from MVM’s existing limited partners which include, 3i, Friends Ivory & Sime, Johnson and Johnson Development Corporation, MC Capital Europe, Pfizer, Prudential and the Shell Pension Trust. Reeders was unable to name the investors at this stage but said 80% of the previous LPs had reinvested in the second fund. It is hoped the remaining £35 million will be raised from pension funds, fund-of-funds and non-profit making organisations in Europe and the US.
Around 75% of the new fund’s portfolio will be UK companies with the US and Northern Europe, particularly Scandinavia, also featuring strongly. Reeders gained much of his experience in biotech start-ups and investing in the US and he remains enthusiastic about select investments across the Atlantic: “There are some hot technologies and really exciting ideas coming out of the US.” One of the sectors he will be targeting for the new fund is pharmacogenomics, the study of how a person’s genes affect their response to drugs. It’s an area MVM is already involved in through its investment in Third Wave Technologies. Third Wave, which floated on NASDAQ earlier this year, develops DNA and RNA analysis technologies for use in genome research, pharmacogenomics and clinical diagnosis of genetic susceptibility.
Reeders believes investments in later stage life science companies are well catered for, especially in the US, but there are still relatively few investors prepared to participate as early as MVM. Around half MVM’s deal flow is generated through its relationship with the Medical Research Council, the fund has the investment rights to technology owned by the MRC. This has produced investment opportunities in sectors such as biotechnology, pharmaceuticals, medical devices, diagnostics and health information technologies. Reeders said: “There’s a big opportunity in devices- we’re looking at a lot at the moment.”