Update: Investing for the long haul

  • Posted on 5 June, 2017
The Rainbow Seed Fund is seeking early-stage companies for high growth, high-risk investment

The winners of the Bio-Start UK 2017 award for engineering biology will be announced on 11th July. The award offers a cash prize of around £200,000 to synbio startups. But this isn’t the only opportunity for you to secure a cash injection. The Rainbow Seed Fund – one of the award’s founders – is a specialist engineering biology fund actively investing in promising young companies.

The RSF combines the best of the public and private sectors to capitalise companies spun out from the UK’s research base in synthetic biology. Our funding comes from the research councils, but we invest on a commercial basis. We have £250 million co-invested in a portfolio that spans healthcare, imaging, technology and software companies in sectors as diverse as human health, energy, transport, infrastructure, security and space. RSF invests in companies with deep science and is looking for teams and companies with big, world changing ideas. With our strong connections to the research base we seek high risk and high growth opportunities at an early stage.

Our approach is to invest early in your company’s history, and maintain funding as you grow through multiple investment rounds. We mostly operate at foundation and seed stage, but are happy to provide matched funding for grants being spun out of university research. Crucially we continue to back companies over time and whilst the first investment is normally very early we invest in subsequent rounds. We’re notable for our patience and are unfazed by projects that might take eight or ten years to reach completion.

Among our strengths is our flexibility. We work with a variety of investment structures, as appropriate to your company and stage of growth. We invest alone or as a syndicate. We have invested alongside all major UK funds at some point as part of a syndicate.

A significant portion of the RSF is ring fenced for engineering biology based companies. These can be in any industry sector such as cleantech to healthcare. We invest in both products and platforms, and focus on companies that offer notable solutions to global challenges with robust and defensible IP.

It’s important to us that your company gets the most from our fund. We work closely with you from day one, helping you deliver on your business strategies, and connecting you into our network. We like to work hands on, and can provide advice, strong industry connections and highly experienced industry experts as well as nimble funding and an appetite for early stage innovations.

A few examples of projects in which we’ve invested so far:

Investing in a theory

RSF were the founding investor in a gene therapy company that had a novel mode of action, but no data. The founder was a senior ex industry leader working with an academic co-founder. Together they presented a strong commercial and academic team. RSF invested to get the company to the stage of compelling in vivo data. The model of a lean and fast moving biotech is effective and in under two years the team have generated significant evidence and closed a series A round. RSF provided the founding investment and is investing again in the next round.

Creating the tools for synbio

RSF have invested in a software company providing synbio tools, as part of a core syndicate. RSF invested alongside angels, providing crucial capital to develop the tools to market. The company is now revenue generating with major blue chip clients and is growing. RSF’s funding drove the transition to software revenue.

Exploring business models

RSF makes early exploratory investments to allow teams to explore business models, protect IP or to hire key staff. We have invested via convertible loans in multiple companies which allow the company to pull together a compelling plan and enter into a larger raise far better prepared. These loans are small and responsive investments alongside ‘family and friends’, which we normally follow with larger equity investments.

We’re always looking for new companies that are the future of British synthetic biology. If you think we can help, please get in touch.

Oliver Sexton, Investment Director, Midven