Hopeful innovators mimic Oxford model

May 16, 2003

University spin-offs in southern England may find getting funding a little easier with the launch of two investment networks modelled on a successful Oxford-based company.

The two networks, in Portsmouth and Thames Valley, have been modelled by Oxford Innovation on its Oxfordshire Investment Opportunity Network (Oion), which last year brokered 14 deals worth more than £3 million between business angels and fledgling companies, many with university roots.

The Solent Investment Opportunity Network is based at Portsmouth Technopole, the innovation centre. Sion will provide access to finance for local business ventures. It held its first investment meeting last week.

The Thames Valley Investment Network aims to provide an investment bridge in and around Reading. It has attracted investors new to business angel activity who want to be involved in increasing the finance and expertise available to high growth-potential companies. The network is sponsored by the Thames Valley Economic Partnership, the South East England Development Agency and Business Link.

University connections may follow the Oion pattern. The network holds regular joint investor presentation meetings with Oxford University's technology transfer company, Isis Innovation, and Warwick University.

Oion was one of the first business-angel networks to be set up in the UK, in 1994, and is now one of the most successful in Europe. It links investors with entrepreneurs seeking finance from £50,000 to £500,000 to develop their technology businesses.

Alastair Cavanagh, Oion manager, said: "The network is very much technology based - a broad range from software to nanotechnology. Protection by patents also raises the barrier to entry for competitors."

Oion receives 40 business plans a month. Mr Cavanagh said: "The plans go forward only when it's the right time. For us, 20 won't fit. There will be five good ones; 15 will be pretty good but not ready. The criteria are: evidence of intellectual property, high growth potential, proof of concept and the nucleus of an entrepreneurial team."

Oion helps companies highlight key elements of the business plan to emphasise during a 15-minute presentation to the network investors, at a monthly meeting at Said Business School in Oxford. Successful companies would then pursue contractual agreement with the business angels.

Mr Cavanagh said: "There is a common misconception about investors. The business angels do not just splash money about. These are intelligent, sensible people who know what they are doing. They go into deals with their eyes open. They know it's high risk with high rewards.

"They are genuinely interested in the businesses they get involved with. It is not just about the money. Their enthusiasm is very important."

A recent success is Warwick Effect Polymers, a spin-off company from Warwick, which won £360,000 funding last month to develop innovations in polymer synthesis for use in applications from hairspray and inkjet printer ink to anti-obesity drugs.

Oion also helped Surrey University spin-off Cybersense Biosystems raise £225,000 in March to adapt bioluminescent biosensor technology to a product that rapidly tests toxicity in contaminated land.

David Kingham, chief executive of Oxford Innovation, said that the network was tackling the equity gap - highlighted by chancellor Gordon Brown in his budget speech - that prevented firms from developing because the capital sums they needed were in short supply. Venture capitalists were interested in investing much larger amounts only in more developed businesses.

Dr Kingham said: "Oion's business-angel investors provide a solution as they bring small amounts of risk capital, management expertise and contacts to help the companies develop to the stage where they can attract further substantial investment."

Details: www.oion.co.uk ; www.solenthub.co.uk ; www.tvin.co.uk

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