The British Innovation Fund Investing in the Best of UK University Venturing
For discussion purposes with Professional Investors only 2Q 2020 BRITISH INNOVATION FUND EXECUTIVE SUMMARY
Key Areas of Specialty: Agricultural Bio- Technologies technology The BIF has been backed by some of The BIF is managed in the leading local The British Innovation partnership with government pension Deep Tech Life Sciences Milltrust International LLP Fund (BIF) is an schemes in the and Milltrust Agricultural AIFMD-compliant United Kingdom patient capital venture Investments, and supported by an capital fund investing in cutting edge spin- Alternative Advisory team of Nano Tech investment specialists outs emanating from Protein and agricultural and leading UK university research. scientific experts.
2 INVESTMENT PREMISE
“Exploration is the engine that drives innovation. Innovation drives economic growth.”
- Edith Widder
3 INVESTMENT PREMISE A BRIEF HISTORY OF BRITISH INNOVATION
Sir Isaac Newton, PRS 25 December 1642 – 20 March 1726 Sir Alexander Fleming, FRS FRSE FRCS English mathematician, physicist, astronomer, 6 August 1881 – 11 March 1955 theologian, and author widely recognised as one of the Scottish biologist, physician, micro-biologist, most influential scientists of all time and as a key figure and pharmacologist. Inventor of Penicillin. in the scientific revolution.
Edward Jenner, FRS FRCPE FLS John Logie Baird, FRSE 17 May 1749 – 26 January 1823 13 August 1888 – 14 June 1946 English physician who was a contributor to the Scottish engineer and innovator. One of the inventors of development of the smallpox vaccine. the mechanical television.
Michael Faraday, FRS 22 September 1791 – 25 August 1867 John Adrian Shepherd-Barron, OBE English scientist who contributed to the study 23 June 1925 – 15 May 2010 of electromagnetism and electrochemistry. Main British inventor who led the team that installed the discoveries include the principles of first ATM cash machine. underlying Electromagnetic induction, diamagnetism and electrolysis.
Charles Babbage, KH FRS Stephen William Hawkins 26 December 1791 – 18 October 1871 8 January 1942 – 14 March 2018 English polymath. A mathematician, philosopher, English theoretical physicist, cosmologist, inventor and mechanical engineer, Babbage originated and author who was director of research at the Centre the concept of a digital programmable computer. for Theoretical Cosmology at the University of Cambridge.
Charles Robert Darwin, FRS FRGS FLS FZS Sir Timothy John Berners-Lee 12 February 1809 – 19 April 1882 8 June 1955 - Present English naturalist, geologist and biologist, best known for English engineer and computer scientist. Inventor of his contributions to the science of evolution. the World Wide Web.
Source: Wikipedia 4 INVESTMENT PREMISE MEET THE KEY MINDS BEHIND OUR PORTFOLIO
Scott White, Founder & CEO of PragmatIC, invented and now A world beating set of mass-production of early stage investments nano RFID from the top scientists at Partnering the UK’s communicators which Andrew Shaw, Founder one of the world’s leading animal track products through & CEO of Attomarker greatest universities research institute to their life cycle and Associate Professor improve the food of Physical Chemistry, chain, enhance animal University of Exeter, at welfare and pioneer the forefront of the UK’s alternative proteins fight against COVID-19 with rapid antibody test
5 INVESTMENT PREMISE WHY UK UNIVERSITIES THE KEY RATIONALE FOR THE BRITISH INNOVATION FUND (“BIF”)
Key statistics UK universities struggle to raise capital to commercialise world class UK universities in top research versus US counterparts despite pioneering science and 10 of global rankings groundbreaking innovations 4 (Oxford; Cambridge; 1 UCL; and Imperial ) BIF provides capital to support early stage spin-out companies through investment via: UK universities in top • University commercialisation companies and university 18 100 of global rankings1 incubators; or • Directly into spin-outs. Spin-out and staff 4,052 start-ups created from Spin-outs must have a viable commercial business and generate 2 universities in the UK revenue Source: 1QS World University Rankings 2020; and Higher Education Business; Advanced ideas reside in academia – incubators search these out 2Community Interaction (HEBCI) surveys 2002/03 - 2017/18 and come to us for acceleration funding once proven
6 ABOUT US
“A dream will not become an innovation if there is no realization.”
- Ciputra
7 ABOUT US INVESTMENT MANAGER MILLTRUST INTERNATIONAL
3,600+ Stocks held Selection of Milltrust is a UK and across six continents Recent Awards: Singapore-based investment group founded Milltrust is the provider 20 Industry awards in 2010 by an experienced and investment manager team of institutional of a range of sustainable #1 Ranked investors and focused on institutional investment Global Emerging Markets sustainable impact solutions focused on equity strategy investing. The firm is Global Emerging Markets, 10,000+ Hectares of regulated by the FCA (UK). Agriculture Investments, diversified land Science, technology & under cultivation innovation, and Climate Change investments. 19 Investment manager partnerships
8 ABOUT US INVESTMENT ADVISER MILLTRUST AGRICULTURAL INVESTMENTS LTD
Milltrust Agricultural The Farmland funds are The British Innovation Fund The investment team Investments (“MAI”) focused on agricultural (“BIF”) invests in university has an average of 20 serves as the adviser to investments in the commercialisation years’ investment the MAI Australia and southern hemisphere. companies, incubators and management New Zealand Buy & Lease spin-out companies experience. Farmland Funds, and to The funds aim to provide emanating from UK the British Innovation investors with an income universities. The investment team is Fund generating, inflation advised by investment adjusted, long duration The fund has specific specialists and investment that is lowly expertise within the areas of agricultural and correlated with other agricultural technologies, scientific experts. asset classes biotechnology, nano tech, deep tech and life sciences
9 ABOUT US HISTORY OF MAI AND THE BIF
Milltrust Creation of BIF mandated for MAI founded in Led to greater in 2017; and capital raising 2015, followed focus on Agri- founding and agricultural by Australia and science within investor in acquisition New Zealand Milltrust and Roslin advice between farmland funds MAI Technologies 2011-2015
Recognition of wider opportunity to invest in science and technology - British Innovation Fund created to pursue these opportunities
10 STRATEGY “The high number of research universities in the UK means it has a long history of scientific discoveries that have become commercial successes.”
- Financial Times, 16 February 2020
11 STRATEGY INVESTMENT UNIVERSE
Scottish Universities UK University Clusters Aberdeen, Dundee, Edinburgh, Glasgow, St Andrews & Stirling N8 Research Partnership Durham, Lancaster, Leeds, Midlands Innovation Liverpool, Manchester, SETsquared Partnership Newcastle, Sheffield and York Aston, Birmingham, Cranfield, Golden Triangle Keele, Leicester, Loughborough, Nottingham and Warwick
Bath, Bristol, Exeter, Southampton and Surrey
Universities located in the cities of Cambridge, London and Powered by Bing Oxford© GeoNames, HERE, MSFT
12 STRATEGY KEY SECTORS
Agricultural Technologies Deep Tech
Biotechnology Life Sciences
Nano-Technology Alternative Protein
13 STRATEGY PRIMARY ALIGNMENT TO THE UN SDGS
14 STRATEGY INVESTMENT PROCESS ORIGINATION
Incubators and University University investment Investor network of angels Commercialisation networks and VCs Companies (“UCCs”)
15 STRATEGY INVESTMENT PROCESS RESEARCH AND IMPACT ASSESSMENT
Characteristics: Targeted investment Due Diligence: rounds: Seed; Series A & B Research Output: Company visits, Identification of investment research reports and Target IRR of 20%, case, valuations, and risks. proprietary models. including dividend payments from portfolio companies and significant Impact Assessment capital appreciation and alignment with UN Sustainable Exit strategy: 5-8 years via Development Goals trade sale; sale to private equity; or IPO
16 STRATEGY INVESTMENT PROCESS PORTFOLIO MANAGEMENT
Investment Proposals: Portfolio and Risk Investment proposals and Management: Quarterly Investment due diligence reports are Carried out on an Advisory Committee submitted to the ongoing basis by the (IAC) Meetings: investment manager for investment manager and BIF Funding Post- Presentation by short- further review, in formally reviewed during Initial Investment: listed companies to the consultation with the the fund’s quarterly Either supported by IAC’s industry AIFM and the fund’s Board meetings the BIF and / or specialists and other Board of Directors, marketed to our participating advisers. allowing numerous network of similar VC All investment checks and balances investors proposals require final throughout the sign-off by the IAC investment process
17 INVESTMENTS
“Venture capital funding for UK tech firms reached £10.1bn in 2019, rising 44 per cent year on year and breaking the all-time high set two years earlier.”
- City A.M., 15 January 2020
18 INVESTMENTS BIF PORTFOLIO
Top 10 Holdings 1 Direct Investments Performance to Date3
#1 Attomarker UCCs and Incubators: 125 #2 Pragmatic Printing 5 business 120 #3 Evox Therapeutics2 units #4 2 115 Osler Diagnostics 78 spin- 2 #5 Oxford Nanoimaging outs 110 #6 Vaccitech2 Spin-outs: 105 #7 Diffblue2 100 #8 Ultromics2 #9 YASA Motors2 95 Dec-16 Dec-17 Dec-18 Dec-19 2 #10 Oxmet Technologies NAV / share (£) Note: 1Ranked by value (31-Dec 2019; and 2Indirect holding through OSI Source: 2OSI unaudited accounts as at 31 December 2019; and 3MUFG (BIF fund administrator)
19 INVESTMENTS TARGET PORTFOLIO
Customised Client Current Investments Portfolio • Current portfolio reflects Incubators • £20m+ institutional current investor requirements Spin-outs and UCCs investment can be • £5m-£20m investment c.60% c.25% structured as bespoke augments construction of stand-alone targeted portfolio weighting of: Cash investment vehicle • c.60% • spin-outs, spread c.15% Opportunity to across 10-20 develop pro-forma investments; Ticket size portfolio to reflect • c.25% UCCs and Incubators c.£2.0m per project institution’s preferred incubators; and UCCs Up to £2.0m sector and investment • c.15% cash for fund weighting Initial spin-out £1.0m-£2.5m costs and follow on investment Follow-on £2.5m-£4.0m
20 INVESTMENTS SHORT-TERM PIPELINE
Bio-tech Agri-tech Life Sciences
• Surrey University spin-out • Oxford University spin-out • Edinburgh University spin-out • Founder has 2017 Women-in- • Agriculture technology company • Patented technology to develop Innovation award working to revolutionise the protein to coat filter of dialysis • Patented device accurately market for animal feed protein machines measures radiation levels in-body • Developing cutting-edge growing • Substantially reduces risk of during radiation therapy, systems to grow a soybean meal inflammatory response in dialysis reducing patient damage replacement crop patients • Close to regulatory approval • Technology builds upon recent • Straightforward to incorporate • Due for commercialisation in late progress in vertical farming and into existing filter production 2020 with hospitals signed-up horticulture systems, allowing • Positive conversations with • Other uses beyond healthcare efficient, reliable production existing filter manufacturers
Selected opportunities from exciting pipeline of near-term investment prospects
21 INVESTMENTS FUTURE PIPELINE
Longer Term Pipeline Construction Impact of KEF
• BIF team visits and maintains • Universities visited / contacted in • Knowledge Exchange Framework regular contact with university Q120 include: (“KEF”) being implemented in teams and attends network 2020 – IP generation and events throughout the year commercialisation now assessed • Universities have longer term in allocation of university funding pipeline of potential spin-outs • Led to significant recent with funding rounds anticipated investment by universities into in 6-24 months commercialisation teams and • BIF team observes these development of spin-outs opportunities and monitors their • From our recent university progress to ensure investment in conversations, we expect a highest quality and best number of high-class investment performing spin-outs opportunities in next 6-18 months
22 CONCLUSION WHY INVEST WITH US
Opportunity to invest in a diversified portfolio of exciting, entrepreneurial businesses with huge growth potential
Ability to support companies formed from world-class UK university research focusing on sustainability, agri-science, technology and health improvement
Strong pipeline of spin-outs currently looking for investment
Target IRR of 20% with 5-8 year exit strategy
Experienced investment team alongside highly knowledgeable, independent advisory committee
23 APPENDICES
“Milltrust’s investment thesis, since establishment in 2010, has been built around sustainable investment and safeguarding the environment”
Simon Hopkins, CEO & Founder, Milltrust International Group
24 APPENDIX A WHY SPIN-OUTS
Spin-outs significantly outperform the broader Five year survival rates: start-up universe 43% for general population of new 100% enterprises in the UK versus 76% for university spin-outs1 80% USO2 survival rate data differs3, but 60% remains ahead of the ONS survival 40% rate for the general business population: 20% Five year survival rate (%) survival rate Five year • Spinouts UK – 60% 0%
• USO database – 61% UK Wales • Gateway to Research – 75% London Scotland South East North West South West • Beauhurst – 88% East of EnglandWest Midlands Note: 1Office for National Statistics; 2USO = USOs General business population University spin-out ; and 3Overall survival rates for USOs, incorporated up to 2015. Source: ‘Developing University Spinouts in the UK’: Technical Note for Research England, July 2019 Note: USOs incorporated in 2014, General business population incorporated in 2012
25 APPENDIX B CORE TEAM
Griff Williams, CFA Simon Hopkins, LLB Alexander Kalis, MA Guy Pengelley, ACA CEO & CIO, Milltrust CEO & Founder, Milltrust Managing Partner, Investment Director, Agricultural Investments International Group Milltrust International LLP British Innovation Fund • Primarily responsible for • Senior figure in the • Portfolio Manager for • Primarily responsible advising Milltrust investment management the British Innovation for developing the International, the industry for more than Fund and MAI Buy & British Innovation investment manager, on three decades Lease Funds Fund the British Innovation • Founded Fortune Group, • Over two decades of • Previously worked in Fund and the MAI Buy & a multi asset class experience at top-tier corporate finance at Lease Funds advisory firm which was asset management Peel Hunt, having • Previously Head of sold to Close Brothers firms including Edmond completed the ACA Europe and interim CEO Group plc in 2006, de Rothschild Asset qualification at at Itaú Asset following senior roles at Management and Deloitte within Management in London UBS, HSBC and Nomura Santander Asset Financial Advisory Management
26 APPENDIX C IAC MEMBERS
Mark Ebert, CPA Dr Kenny Tang, CFA
Ag-Science Advisor Deep Tech Advisor
• Senior figure in the investment world with over • Founder and CEO of Oxbridge Climate Capital, an 30 years’ experience managing investment investment and advisory house and thought banking, equity brokerage, private equity and leader in the environmental, low carbon, clean asset management businesses tech and climate change spaces • Currently completing a PhD at the Royal • Author of several books, including “Taking Agricultural University Research to Market: How to Build and Invest in • Most recently Chairman of the Fortune Group in Successful University Spin-outs” London having previously been Global Head of • Earned his doctorate on International Business M&A at UBS, co-Head of Panmure Gordon Strategy at Cambridge Judge Business School where he founded private equity firm Lyceum and subsequently a Masters from Oxford Capital and Head of Investment Banking at • Christened “The Al Gore of Business” by Merrill Lombard Odier Lynch Asia Pacific
Griff Williams and Simon Hopkins are also IAC members Discussions are currently progressing in relation to the addition of further experts to the IAC
27 APPENDIX D FUND INFORMATION
Platform: Milltrust International Fund Terms Managed Investments ICAV Structure: Open-ended Investment Company Domicile: Dublin, Ireland Regulatory regime: QIAIF Inception date: 25 November 2016 AIFM: KB Associates Currency: GBP Investment Manager: Milltrust Management fee: 2% International LLP Performance fee: 20% over hurdle rate Investment Adviser: Milltrust Agricultural Investments Ltd Hurdle rate: 8% Administrator: MUFG Alternative Fund Services (Ireland) Ltd Subscription terms: 10 years; and two trading days annually Custodian: Mitsubishi UFJ Investor For Professional & Accredited investors only; Investor types: Services & Banking (Lux) Registered for distribution in UK & Ireland Auditor: KPMG Bi-annual NAV calculation; quarterly portfolio Reporting: Legal: William Fry commentary
28 APPENDIX E PORTFOLIO -INCUBATOR
Key shareholders Roslin Technologies - Overview The University of Edinburgh • World-leading Animal Bioscience Research company established as British Innovation Fund the commercialisation arm of the renowned Roslin Institute and JB Equity University of Edinburgh’s Royal (Dick) School of Veterinary Studies Funding rounds • Exists to deliver breakthrough commercial solutions in the Animal April 2017: £10 million Seed round Health, Breeding/Genetics and Animal Nutrition space May 2019: £10 million second • Offers opportunities for investors looking to capitalise on the tranche of Seed round growing demand for food and agricultural products 2020: Proposed £50m funding round • No spin-outs currently; once key projects are more progressed the intention is to spin these out as individual companies • BIF instrumental in setting up Roslin Technologies – both in advising on the project and investing as a founding shareholder
Now generating revenues of >£1m (FY19) across various projects, with significant growth forecast Source: Roslin Technologies management information as at 31 December 2019
29 APPENDIX E PORTFOLIO -INCUBATOR
Early-Stage Projects Overview of Business Units DestiNa JV Roslin Pigs: Pathogen free facility to produce both Gene Edited and Insect Project non-Gene Edited animals for animal modelling and for breeding Shrimp Project Trout Project Frozen Aviary: Allows the extraction, cryopreservation and faithful New projects and opportunities are recovery of male and female primordial cells for avian species constantly assessed for viability – at present, there are almost 30 such prospects being looked at Animal Cells: Focused on the development of induced pluripotent stem cells (iPSCs), which have numerous applications across medicine
Eggcellent proteins: Develops four separate categories of purified proteins (protected by IP) for use in animal and human research
E-Coli Vaccination: Progressing the commercial development of an E. coli vaccination for cattle to prevent life-threatening illnesses
Source: Roslin Technologies management information as at 31 December 2019
30 APPENDIX F PORTFOLIO -UCC
Key Shareholders Oxford Sciences Innovation (“OSI”) Lansdowne Partners (UK) LLP • Commercialisation partner of Oxford University IP Group plc • Significant stake in every qualifying spin-out company emanating Invesco Asset Management from any of the university science departments Braavos Capital • Current portfolio has grown to almost 80 spin-out companies since OUEM operations began in 2015, from seven at seed investment University of Oxford • OSI has raised more than £600m from a diverse group brought The Wellcome Trust together by a commitment to build thriving science and Sequoia Heritage technology companies from Oxford Temasek • First successful company exit in 2019 (Latent Logic acquired by The British Innovation Fund Waymo, Google’s self-driving unit) • A number of portfolio company B and C rounds planned for 2020
Portfolio developed from eight investments in 2015 to 78 at the end of 2019 Source: OSI management information as at 31 December 2019
31 APPENDIX F PORTFOLIO -UCC
Key Investment Segments Selected OSI Spin-Outs Deep Tech Evox Therapeutics Osler Diagnostics Digital Health Biotechnology company focused Creator of a portable device Life Sciences on harnessing and engineering which can test a range of Software and AI the natural delivery capabilities disease biomarkers in 10-15 of exosomes to develop an minutes as accurately as a entirely novel class of laboratory test biotherapeutics Oxford Nanoimaging Vaccitech Commercialising the Breakthrough vaccine delivery Nanoimager, a portable super platform has proven in patient resolution microscope, ONI now results developed by the world’s has customers using its products top vaccine specialists. Pipeline in leading laboratories across of vaccines include universal the globe influenza and prostate cancer Source: OSI management information as at 31 December 2019
32 APPENDIX F PORTFOLIO -UCC
Key investment segments Selected OSI Spin-Outs Deep Tech Diffblue Ultromics Digital Health Software creator using AI to World’s first outcomes-driven, Life Sciences write tests to catch errors and AI-based ultrasonic diagnostic Software and AI protect from regressions and support solution for coronary bugs. Customers include artery disease. Partnerships with Goldman Sachs and Amazon leading cardiology clinical Web Services centres in the US and the NHS YASA Motors Oxmet Technologies Supplies custom and off-the- Develops, licenses, and shelf e-motors and controllers to manufactures proprietary alloys, automotive customers based on alloy powders and alloy a unique patented motor components for the aerospace, technology automotive, industrial and biomedical markets Source: OSI management information as at 31 December 2019
33 APPENDIX G PORTFOLIO SPIN-OUT
Key Shareholders Attomarker University of Exeter • A spin-out from the University of Exeter, Attomarker has developed The British Innovation Fund a small, simple-to-use blood testing device able to perform blood Merlin Investors (Individuals) tests from a single pin-prick of blood, with results in c.5 minutes Funding rounds • Multi-patented technology collects the blood sample on a June 2017: £0.5 million seeding disposable credit-card sized chip which slots into a mobile device, October 2017: £2.5 million Series A docked to an iPhone. The iPhone camera visualises the blood tests 2020: Proposed extended Series A for which are then interpreted by the iPhone. additional £5 million • The device represents a major advance in global healthcare management, delivering mobile, low cost, fast and accurate results • Short-listed as one of the top four global contenders for the prestigious Longitude Prize
At the forefront of the UK’s fight against COVID-19 with rapid antibody test Source: Attomarker management information as at 31 December 2019
34 APPENDIX H PORTFOLIO SPIN-OUT
Key Shareholders PragmatIC Printing Cambridge Innovation Capital • A spin-out from the University of Cambridge, PragmatIC Printing ARM Technology Investments provides a unique technology platform to create innovative, ultra- Avery Dennison low cost flexible integrated circuits (“FlexICs”) The British Innovation Fund • Delivers FlexICs which are thinner than a human hair and can be Funding rounds easily embedded into everyday objects January 2015: £5.4 million Venture • FlexICs enable the potential for trillions of smart objects that can round engage with consumers and their environments October 2016: £18 million Venture round • Several exciting projects planned for 2020, including scale-ups of January 2019: £13.2 million funding existing projects with the NHS and UK Government and additional round commercial trials with large consumer brands • Proposed 2020 funding round has support of major shareholders
Rights issue in January 2019 completed at a 42% premium to the BIF’s in-price Source: Pragmatic management information as at 31 December 2019
35 CONTACT US
For additional information please contact us:
Milltrust International Group
Milltrust International LLP Milltrust International Group Milltrust Agricultural Investments Ltd 6 Stratton Street (Singapore) Pte Ltd 6 Stratton Street London W1J 8LD 77B Tras Street London W1J 8LD United Kingdom Singapore 079016 United Kingdom +44 20 8123 8316 +65 6225 3052 +44 20 8123 8316 [email protected] [email protected] [email protected]
For professional investors only. This document is strictly private and confidential and is issued by Milltrust International LLP, incorporated in the United Kingdom, which is authorised and regulated by the Financial Conduct Authority. Milltrust International LLP has its registered office at 5 Market Yard Mews, 194-204 Bermondsey Street, London, SE1 3TQ, United Kingdom and is a subsidiary of Milltrust International Group (Singapore) Pte Ltd. None of the investment products mentioned herein are regulated collective investment schemes for the purposes of the UK Financial Services and Markets Act 2000. The promotion of such products and the distribution of this document are, accordingly, restricted by law. Most of the protections provided by the UK regulatory system and compensation under the UK’s Financial Services Compensation Scheme will not be available. The investments described herein are only available to investors permitted to invest in the prospectus of the fund and are not available to private investors. The nature of the fund investments carries certain risks and the Fund may utilise investment techniques which may carry additional risk. The value of investments and the income from them may fall as well as rise and is not guaranteed. Past performance is not a reliable indicator of future performance. This document contains forward-looking statements which are correct as at the date of this document. Such statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance or projections to be materially different from future results. Any investment in the funds mentioned above should be based on the full details contained in the relevant prospectus and supplements which are available from www.milltrust.com. Notice to Swiss investors: Swiss representative and paying agent is State Street Bank International GmbH, Zurich Branch, Beethovenstrasse 19, PO Box 8027 Zurich, Switzerland. The prospectus, memorandum and articles of association, the latest annual and semi-annual reports as well as the Portfolio changes may be obtained free of charge from the Swiss representative. Notice to US investors: the shares of Milltrust International Managed Investments ICAV and Milltrust International Investments SPC have not been registered under the 1933 Securities Act or under the 1940 Act; however the company takes advantage of the 3[C]7 exemption and shares are available to 3[C](1) US qualified purchasers and those qualifying under Reg D distribution activity in the US is undertaken by Silverleaf Partners LLC, a registered broker-dealer based in New York. Note: Icons used in this document have been created copyright free by authors from Freepik, ultimatearm, Eucalyp and Icongeek26 from www.flaticon.com
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