Sandy McKinnon

#TransformativePotential As the UK government considers backing consolidating pension pots into large, pooled funds (Pension mega funds), we face a remarkable opportunity. Biomedical mega funds could bridge the "Valley of Death" in drug development while offering stable investor returns. But how can such a bold model manage risks while amplifying returns? #InnovativeStructuring The solution lies in sophisticated financial engineering. Through tranches, investments are segmented for different risk appetites: senior tranches offering 5-6% fixed returns for pension funds, mezzanine tranches balancing moderate risk with higher yields, and equity tranches absorbing first losses but providing outsized returns. But how do we ensure resilience against systemic shocks? The answer lies in correlation modeling. By understanding the relationships between different drug projects, funds can optimize their portfolios, balancing high-risk correlated projects with independent ones. This approach safeguards returns, even when regulatory delays or market disruptions hit specific therapeutic areas. #MonetizeEarly, Can we generate returns before a drug reaches the market?  Early-stage monetization generates returns before market approval through licensing agreements, partnerships, and asset sales. A Phase II oncology drug could generate $200M upfront plus milestone payments, creating immediate cash flows. #SteadyFlows How do we ensure consistent returns in such a high-risk industry? Reserve funds act as crucial buffers while a staggered portfolio strategy spreads investments across late-stage (3-5 years), mid-stage (5-7 years), and early-stage projects (7-10 years), ensuring steady cash flows. #GovernmentSupport Public sector backing through credit enhancements and guarantees reduces default risks. Third-party guarantees with insurers provide additional security, aligning healthcare innovation with financial sustainability. #LeveragedReturns, Can we amplify returns while managing risk? Asset-backed securities (ABS) leverage royalty streams from approved drugs for additional capital. The LifeArc-CPPIB Keytruda deal ($1.3B) demonstrates this approach's potential. #BreakthroughPotential A portfolio of 100+ oncology projects improve breakthrough odds dramatically. Even for Alzheimer's research, structured funds (Portfolio Optimisation) could unlock $5B annual revenues from successful treatments. #CollaborativeInnovation Cancer Research UK (CRUK) Cancer Research Horizons  , LifeArc Ventures, and research organisations etc could collaborate within this framework, accelerating patient access while optimising returns. This creates a virtuous cycle of innovation and investment. Through careful structuring, risk management, and innovative financing, we might finally bridge the "Valley of Death" in drug development. #UKpensionmegafund #UKpooledpensionpots #tranches #securitization #financialengineering #portfolioptimisation #seniortranches #ABS #investment #VCs

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"Funding Collapse sends investment in start-ups to six year low" The Times today covering the shocking stats that VenturePath uncovered, with our partner Beauhurst. Great quotes from supporters Michael Moore CEO, BVCA and Julian David CEO, techUK. * UK VC funding at Series A is -44% from last year, and worsening * Q3 24 is down a staggering 57% from Q2, itself down from Q1 * 9 in 10 seed funded startups cannot access Series A VC funding, the next 'rung on the funding ladder' * Just 32 future scaleup companies across the whole of the UK were able to access their first VC funding round in Q3...a 6 year low * Half a billion less capital is going in to UK scaleups at Series A, than just 2 years ago! As the UK scaleup funding gap widens, we are losing ground against other countries, at both startup stage (a position the UK worked hard to achieve, since 2011), and for scaleup support. OECD data: 13th in the world for scaleup support, and that's before Series A funding access dried up. I get that its confusing. Another report (BBB, Nations & Regions) released this week spoke of positive trends in private investment, stating "The data for Q2 2024 shows that investment value has continued to grow". Great, I love to see optimistic data. But under analysis that bundles venture with private equity (later stage), where a few megadeals skew the numbers. Otherwise the exact opposite is true. Our independent research here, for the UK ScaleUp Investment Mission, is laser beam focussed on Series A. The funding round where companies move from the c.1m startups launched each year, through the 2,179 that access seed funding, into the rarefied category of being recognised as future scaleups, attracting Series A funding (£2-10m). The UK venture landscape is currently funding just 248 pa of these companies, and declining. We've been sharing this urgent call for support with the new Government since the day after the election. I've personally met with several Ministers, and spoke to all the relevant Government departments. I will shamelessly repeat loudly what is at stake. UK scaleup funding at Series A has nearly halved in a year, and continues to decline steeply, more than halving in the last quarter. VenturePath developed The UK ScaleUp Investment Mission to convene the scaleup support ecosystem and £7bn of funders to help address this problem, to improve nationwide access to VC investment, and create more venture-backed successes. We have clear support, clear recommendations to reverse this decline in UK scaleup investment, and have made a clear ask of Government for participation in this, to ensure immediate action is taken to create the conditions for success for UK scaleups, ensuring the focus on growth isn't undermined by lack of capital, or equitable access to it. Government decision makers, we'd love your interest, to progress to action. HM Treasury: Rt Hon Rachel Reeves Spencer Livermore James Murray & CC Poppy Gustafsson (welcome to the debate).

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Owning a niche and solving key customer needs, the key to DeepTech Commercialisation? At Empirical Ventures, we often encounter groundbreaking scientific innovations facing a dual challenge: - Developing novel technology - Proving that this technology solves a pressing market problem For startups, one crucial factor that is often overlooked is speed of execution. Talent and intellectual property are all critically important, but the ability to move swiftly is what allows startups to enter new markets before incumbents. In DeepTech, focusing on a market niche perfectly aligns with the benefits of speed. Examples of niches in DeepTech: Performance Niche - These customers adopt new technologies to outperform competitors or showcase their innovation capabilities to outside stakeholders. Bottom-Line Niche - These customers face immediate pressures that impact their profitability and are motivated to engage with emerging solutions. Silveray’s recent funding round exemplifies these dynamics perfectly. Their flexible digital X-ray detectors have broad potential across industries. However, it is their traction in the aerospace sector and specifically weld inspection that got us excited. For Silveray the niche is driven by two critical factors: Regulatory Pull: Upcoming legislation mandates the digitization of existing and future X-ray film records. Cost Savings: Silveray’s solution delivers significant financial benefits, making it highly attractive to customers facing bottom-line pressures. Silveray have the only viable solution for the digitisation of industrial weld monitoring. With only moderate penetration of this market (<2%) we believe they could generate 8 figure revenues by 2030. This nicely highlights that niche's can be lucrative in the right industries. Great to welcome Dan Cathie and the team at Silveray to the EV portfolio. Looking forward to supporting them as they continue to grow. CAPITAL AT RISK, FOR PROFESSIONAL INVESTORS ONLY

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Together with Dr Jussi Westergren, Emmy Network Fellow in Computer Science at Keble College, Oxford, I’ve written for Sifted on the importance of the budget tomorrow for the future of UK tech. It’s absolutely vital that the Government invests in developing the country’s next-generation compute capacity - or ‘supercomputers.’ Next-generation compute is set to drive breakthroughs in everything from drug discovery to financial modelling via supply chain and how we understand language in the near future. And will also create value for businesses and enable startups to accelerate their development exponentially. If the government does not adequately support home-grown supercomputing, the UK risks losing its status as a leading tech hub as its startups struggle to compete with rivals in Europe and the US. But by delivering funding and fostering a conducive wider investment environment, Britain could thrive in the supercomputing era. The depth of tech, research and business talent in this country is second to none, and the appetite from start-ups, corporations and researchers is there. A great deal of work has already been undertaken in Edinburgh in preparation for this investment. Additional schemes can be balanced around the country, and indeed there are a number of sites which would be suitable to host a supercomputer system. Bletchley Park is such a site: with obvious historical symbolism, geographic advantages and the recent host of the global AI safety summit. Alan Turing brought enormous benefits to humankind, and it would be a fitting tribute to him. Turing Machines still influence current computer science and the Turing Test is more relevant than ever. Close to Oxford, Cambridge and London - home to many of the finest brains in the world - the Bletchley Park SuperCompute is a project that must happen. Full piece here:

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AI Tech in Focus   Brain Scans and AI Used to Detect Dementia Nine Years Before Conventional Diagnosis Researchers at Queen Mary University in London used machine learning to assess cognitive communication between 10 areas of the brain that have been shown to be vulnerable to dementia. The study involving 1,100 people found that using AI analysis of the MRI brain scans of these neural networks accurately predicted about 80% of cases of dementia nine years before a formal diagnosis was actually made. Further, the AI technology was able to predict within two years exactly how long it would take before the onset. The test takes 10 minutes. Dementia is caused by certain proteins in the brain, but patients can live for years with those proteins and show no signs of dementia. Current methods used to detect dementia involve memory tests and measurements of brain shrinkage. It’s hoped that the early detection using the AI trained scans will help identify people who are going to develop dementia and benefit from early treatments. VC Investors are always adjusting their "Play Book" with a variety of options for investing. Mikal Ventures is one of those alternatives, offering curated solutions to real world problems. Reach out if you have questions on how we can be of assistance and bookmark https://mikalventures.com/ for additional insights and information.

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3/4 The UK’s medtech sector is valued ~£25 billion, with >3,700 companies. Several high-profile startups securing funding this year helps retain this hub-status. Notable activity from firms like CMR Surgical, who has raised $1.18B. UK secured some of the largest deals across Europe. Government Support: The UK government has implemented supportive policies such as the Life Sciences Vision and R&D tax credits, helping startups scale faster and access funding. There's a clear eye on diagnostics and remote monitoring, so now might be the time to attack 📈 Continue to expand your conversations globally as the world glimpses at a return to positive investment rounds.

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AI Tech in Focus   Brain Scans and AI Used to Detect Dementia Nine Years Before Conventional Diagnosis Researchers at Queen Mary University in London used machine learning to assess cognitive communication between 10 areas of the brain that have been shown to be vulnerable to dementia. The study involving 1,100 people found that using AI analysis of the MRI brain scans of these neural networks accurately predicted about 80% of cases of dementia nine years before a formal diagnosis was actually made. Further, the AI technology was able to predict within two years exactly how long it would take before the onset. The test takes 10 minutes. Dementia is caused by certain proteins in the brain, but patients can live for years with those proteins and show no signs of dementia. Current methods used to detect dementia involve memory tests and measurements of brain shrinkage. It’s hoped that the early detection using the AI trained scans will help identify people who are going to develop dementia and benefit from early treatments. VC Investors are always adjusting their "Play Book" with a variety of options for investing. Mikal Ventures is one of those alternatives, offering curated solutions to real world problems. Reach out if you have questions on how we can be of assistance and bookmark https://mikalventures.com/ for additional insights and information.

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It was fun to take our #fixtheregulators campaign to Parliament this week, at the UK House of Lords Communications and Digital Committee's inquiry into AI. Startups are delivering AI-based innovation across the economy, but we have a regulatory system that is ill-equipped to bring the best of it to market. Instead, regulators are a barrier to progress because they lack the risk appetite, resources or rules (sometimes all three!). This needs fixing as an urgent priority for the UK's industrial strategy and broader approach to R&D. This doesn't just apply to AI - but the speed at which AI is moving makes the regulatory challenge all the more acute. Great to sit alongside Gerard Grech and Susan Bowen!

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Application for London’s Largest Demo Day is well on the way, but now it’s time to bring some spotlight on one of our partners who made this event possible🔥. We are super excited to be supported by Grantify UK ! I’ve known about Grantify and the man behind it (Mat Westergreen-Thorne) since last year. His story of resilience and perseverance with Grantify is super inspiring. Similar to my case with Rare Founders, Matt set up Grantify to solve his own problems with #grants  Anyone who has tried to research or apply for grants can relate to this😥. But he actually solved the problem. Now with Grantify, all you need is to sign up and get matched with the right grant, and with up to a 60% success rate with grant applications, #founders can get their funding in no time (subject to them being actually eligible for grants❗). I’m super grateful that companies like Grantify see and respect the work we do with Rare Founders and the effort we put into creating something different like London’s Largest Demo Day. By the way, for those founders who are looking at grants and want to get a special 𝟭𝟬% 𝗱𝗶𝘀𝗰𝗼𝘂𝗻𝘁 from Grantify for the Rare Founders community, see the slides below. One of the last slides has a QR code so you can check your eligibility and, if eligible, get your 10% discount.

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Exit economics. Hot on the heels of Darktrace, another Cambridge innovator finds an exit for its investors via the US. With average European exit valuations below €50m this is a great deal for investors and for the IP - that will find a home within an industry heavyweight. #fromzerotoone #IPexiteconomics

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Very much looking forward to talking to founders that are enabling enterprises to get their data ready for AI consumption. Sign up below!

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"Is the UK a hard place for DeepTech funding?" I always love answering this question. The UK and Europe is one of the best places for DeepTech funding! 🤘 We have some of the best DeepTech funds based right here in Cambridge with Cambridge Innovation Capital, IQ Capital, Martlet Capital and Amadeus Capital Partners. Last year, The 2023 European DeepTech Report reported the UK was one of the top three countries to receive the most DeepTech funding across Europe seeing a total $3.4 billion raised. 💥 DeepTech is one of the most resilient funding sectors to be in right now. 🚀🚀🚀 Cambridge Future Tech Lucie Polakova #venturebuilding #deeptech #deeptechfunding #cambridge Pic: Talking careers in tech at University of Cambridge 🤘

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🔬 The transition towards biomanufacturing, and the move away from traditional, energy-intensive processes in industry is creating unprecedented opportunities for start-ups. Understanding the investor's perspective in this space can help founders prepare more effectively for their fundraise. Investment Manager, Dr Marina Fuentes, details the most critical aspects Mercia Ventures and other investors look for at the Series A stage. Read more ⏬ #BioManufacturing #Blog #Investor #VentureCapital #Investment #SeriesA #Founders #Opportunity #Learning

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Great to see Robert Gunn share his experience of going through the Northern Gritstone & Deeptech Labs Inaugural NG Studio Programme. Auxetec Limited have developed an advanced elastomer material that offers delamination protection, impact protection and shock absorption, as well as strength & durability. It is highly tuneable, transparent and easily manufactured. The leadership team at Auxetec have so many ways to commercialise this new generation material across a wide variety of high-growth applications. But which path should they take? Which markets should they serve? What should be their business model and how should they go to market? How and when should they build out their team, develop & package their technologies and what funding will they need? Who are the best investors to help them on their journey? Throughout a 3-month programme, Robert and his team had access to 60 deeptech experts who helped them figure the right way forward. They now have an absolute clarity of vision, and a clearly defined pathway to success.. at scale. Auxetec will be coming to market to raise their Seed round over the coming weeks This is what we do: we crowd-in expertise and investors to help turn brilliant scientific breakthroughs into brilliant - and highly investible - high growth ventures. Faster. We're super-excited to start Cohort 2 in Manchester next week! Northern Gritstone I The University of Sheffield I The University of Manchester I University of Leeds

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#DeepThoughts Once a week the #deeptechbio team at Octopus Ventures share a topic which we have been thinking about. We want to create conversation, meet founders and experts, and share our excitement! 🤓 OV is a generalist fund of specialist teams. Internally we’re split into six different groups - or ‘Pods’: Deep Tech, Biotech, Consumer, B2B, Health and Fintech. You might notice that Climate Tech is missing from that list. We’ve experimented with a Climate Tech Pod in the past, but it became clear that Climate was a motive force more than a domain specialism and that Climate Tech entrepreneurs could run businesses that straddle any number of our Pods. So instead we've embraced a Pods and Tribes model (thanks Spotify) forming a team of Climate Tech investors that sit across our Pods, making sure we always have the right mix of people sourcing and reviewing Climate opportunities. I'm sharing this structure because it highlights how challenging it can be to categorise a Climate Tech startup. The consensus online is that a Climate Tech startup is one whose trading activity supports either the mitigation of, or adaption to, climate change. The breadth of potential activity within this definition makes it very hard to evaluate a given company’s Climate Tech credentials however. In response I’ve been developed a mental model for Climate tech classification that I thought I’d share today. First Order These companies have a direct effect on atmospheric warming. They might do this through Point-Source Capture, like Seabound; through the replacement of fossil fuels with green alternatives, like DRIFT Energy Ltd or copenhagen atomics; they could focus on the capture and sequestration of atmospheric CO2, like Brilliant Planet; or they might offer low emission alternatives, as Arda Biomaterials does with leather and SCiFi Foods does with beef. Second Order These startups engage in commercial activities that have an indirect effect on atmospheric warming. Remote monitoring services, such as AIRMO's methane monitoring solution, or Solaris Suborbital Inc.'s wildfire monitoring service, are good examples of this type of Climate Tech. Third Order These companies vital to accelerate our transition towards net zero emissions. Companies like Metris Energy, who are accelerating the deployment of solar energy by commercial landlords; Kita, whose insurance offering accelerates the maturation of the carbon markets; and Origami who offer Battery Energy Storage System owners a way to optimise the yield on their assets. NB. Whilst it’s true that there is an increasing bias towards Bits over Atoms as you move outwards from a direct interface with our Atmospheric composition, I don’t believe classification it’s as simple as an Atom vs. Bits distinction. How do you think about the divisions within Climate Tech space? Are there any exciting Climate tech startups we should be looking at? Let us know in the comments below.

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OK, Insurance contacts and disrupters - one of the startups I have invested in (Elddir Ltd) has an amazing product called Safer Cap. Stops youngster being poisoned after accessing medicines. The challenge is that the team want to run tests of the cap with children. No medicines just bottles. Who can cover this economically. Please let community and Richard Harlow know. #bermuda #insurance #safermedicines

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When the first alphabet in these conversations changes from 'M" to 'B', you know the funding winter is transforming into spring 🌱 #VC #VentureCapital #Earlystagefunding Read more about the latest monthly funding report for VC funding in July 2024 here: ttps://https://lnkd.in/dhdWF8fP

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