Knowing their onions

Nigel Wild talks to Eileen Modral, manager of the Oxford Investment Opportunity Network

It is said that those who would like to know the value of a little money should try borrowing some.

Borrowing money for anything is now pretty tough. The tsunami of credit of a mere 18 months ago has now subsided and barely laps the beach.

That the bubble of consumer credit has burst is probably no bad thing: but for businesses, finance is their lifeblood, especially for the fledglings with no track record and precious few assets.

The Oxford Investment Opportunity Network, OION, can bridge that finance gap, offering 13 years unrivalled experience of matching companies with investors.

Known universally as ‘Onion’, OION is now actually three investment networks – OION itself, Oxford Early Investments, OEI, and Thames Valley Investment Network, TVIN.

OION concentrates on high technology businesses, mainly life sciences but also precision engineering. While medical devices and diagnostics feature strongly in their portfolio, drug discovery companies are now far less prominent.

OEI follows the OION path, but as its name suggests, is about pre-seed and seed capital.

These high-tech businesses revolve strongly around intellectual property and patents.

TVIN covers fast-moving consumer goods and lifestyle companies.

Eileen Modral is Network Manager, responsible for OION and OEI; TVIN has its own manager, Leo Dunne.

Eileen outlined the early days and how things have changed during 2009.

“OION was set up by Oxford Innovation as part of the drive to commercialise research. It took about six years to get established and create a network of business angels. We do have links with venture capital organisations, but most of our funds come from angels.

“With the recession, the last six or eight months have really seen some changes. Investors are taking far longer to invest, often because they have earlier investments which they need to continue to fund. The investors themselves have seen a fall in their own liquidity. The investments that provide them with the funds to put in have dropped in value.”

The same problems afflict the venture capital firms, too, and raising new funds is problematic, the appetite for investors to risk their monies in this way has diminished.

OION helps to secure funds between £200,000 and £1.5m, mainly in companies that are at beta stage, quicker to market, revenue generating and ready for the critical push to the next step.

Thanks to a major institution (which prefers to remain anonymous) offering match funding over the last year, the network has achieved a record number of deals and attracted new investors to OION. Deals range from £25,000 to Bioco, a company which helps small biotechs to succeed, to £530,000 to Axon, which offers diabetes care. In between these two figures are a number of fundings around £250,000.

Eileen sees some 550-600 business plans a year. She conducts a sift, passes some to TVIN, then contacts those of interest. Companies learn of OION by word of mouth, from investors or from the website of the British Business Angels Association, of which OION is a member.

Some companies are not investor ready, so Eileen will keep in regular touch to check progress.

And not all the companies are from Oxfordshire; some are from across the UK and Europe as well.

Many cross-border relations are being established. Companies with their HQ in UK may conduct research elsewhere. Investors are increasingly building contacts across the continent, sharing expertise and reducing risks.

The network hold 21 meetings a year featuring five companies in each meeting. It falls to Eileen to ensure that no two companies at any meeting are in the same field.

Prior to a meeting, the companies are given a dry run in front of a panel of some of the network’s investors, who critique a very focused 10-15 minute presentation. There is a fee for any company presenting, £400 for OION, £300 for TVIN and £200 for OEI.

The network has 115 investor members, of which around 50 are active. OION and TVIN also have business members, usually professional firms like accountants or lawyers.

“The number of business members used to be quite high” Eileen said, “but that’s gone down a lot. It costs £1000 a year to join and the firms need to see a good return on that investment.”

OION also has sponsors including NESTA, the National Endowment for Science, Technology and the Arts.

OION works closely with Isis Innovation, Oxford University’s technology transfer office, and holds one special investors’ meeting a year with Isis. This allows OION to help any potential spinouts to become investor ready. Perhaps surprisingly, there are but two or three spinouts each year; most deals through Isis are licensing.

Success brings it own rewards and in July 2009, OION was named Angel Network of the Year at the British Business Angels Association annual awards.

Eileen said: “Thanks to us, 21 companies raised £4.5m investment in a tough climate and leveraged an additional £10m from other sources in consequence. We’re pretty chuffed!”

Article courtesy of the Oxford Times

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About nigelwild

Nigel is a business advisor specialising in human resources and biotechnology. A freelance journalist, his monthly feature 'Bioline' for regional newspaper the Oxford Times showcases life sciences in the county.
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