Biotech plans get state go-ahead

By Deborah Hill Cone

Friday 17th May 2002

The biotech vision of Dunedin entrepreneur Howard Paterson came a step closer this week with the announcement the NZ Biotech Fund No 1 had been selected to start a government-backed venture capital seed fund.

NZ Biotech Fund No 1, a proposal put forward by Mr Paterson's Dunedin-based team, was the only biotech-focused fund chosen and was listed first of the six successful submissions.

Mr Paterson told The National Business Review the concept behind the fund was for a line to be ruled off under the current biotech companies he is involved with, such as Blis and Botry-Zen, with any new biotech ventures to be backed by the fund.

"What happens is [with] new companies, as they come along, we would fund those and take them to market. We would run it here and fund different propositions to varying amounts, always with a very commercial view. We want to see these things making money as soon as possible," Mr Paterson said.

He said his current management team would have "golden handcuffs" tying them to the concept for the next five years.

He is confident there will be sufficient support for their fund to be worth $60 million - and believes there were some good potential biotech companies needing backing.

"We would be putting management in, giving sufficient capital, bringing additional capital in, imbuing the whole thing with life and pushing it out to the world."

The venture capital management company, provisionally titled Quest VC, will have Mr Paterson, Max Shepherd, Tak Hung, Mike Bennett, Stuart McKenzie and David Parker as directors.

Mr Paterson said the staff would be given a chance to invest.

"We have a management company and some really talented staff here. I don't need any more money personally at all, but the staff would be incentivised," Mr Paterson said.

Mr Parker, a South Island law partner who has played a pivotal role in creating biotech startups promoted by Mr Paterson, said agri-biotech is the area most analysts think is a profitable source of new ventures.

"We have an established track record as New Zealand's leading commercialisers of new agri-biotech ventures based on discoveries by CRIs, universities and private innovators from all around New Zealand," Mr Parker, who is a Labour list candidate, said.

The other successful venture capital fund managers were Endeavour I-Cap, IO Fund, iGlobe Treasury Funds, TMT Ventures and No.8 Ventures.

Endeavour I-Cap, a consortium headed by entrepreneur Neville Jordan, said it planned to establish a $50 million fund.

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