UKBAA Angel of the Year Sunil Shah highlights the emerging opportunities in the biotech space and shares his experiences of working in it
Earlier this year, The Association of The British Pharmaceutical Industry (APBI) conducted research that found that life sciences was one of the highly innovative which could be responsible for contributing to a new wave of growth worth an extra £14 billion a year to the UK economy by 2025. The research found that life sciences could account for £8.5 billion of that growth and potentially create 31,400 more jobs.
With our 2nd Future Forward taking place on 27th November 2019, which explores early-stage investing across some of the fastest growing sectors including life sciences, automotive and mobility, we spoke with Sunil Shah, the co-founder and CEO of o2h Group, who won Angel of the Year at the UKBAA Angel Investment Awards in July and the OBN Special Recognition Award for his contribution in the Life Sciences Industry and will be speaking at event this week.
Sunil’s passion for angel investing was borne following the exit of his first successful business, Oxygen Healthcare. Excited by the innovation taking place in the biotech therapeutic space, Sunil found an opportunity to utilise his expertise to help start-ups achieve their goals.
“We started investing in the biotech therapeutic space with our own money and we made 20 early-stage investments in that area. We saw a number of highly successful exits to Big Pharma across the scale of the companies that we worked with that started off as fledgling companies. We have that experience of helping them develop and grow, and the network to support them. As entrepreneurs you love growing and starting businesses, so we knew we could leverage and do more of that across multiple businesses using skills that we’ve picked up along the way.”
A member of the Cambridge Angels board, Sunil has learned from his fellow investors and understands that sharing and leveraging each other’s expertise can make for successful investments. He explains:
“I am on the board of Cambridge Angels and through that we see some great opportunities. I leverage other investors’ expertise around the table there; around 65 exit entrepreneurs that are fairly technology-driven. If they invest into a company, I may follow them in because I know that they have expertise, which I don’t have, and if I’m getting into a biotech investment, they may look to me.”
Investment in biotech is an under-invested area in the UK, whereas in the US they are investing much larger sums of money into the sector. Sunil says:
“In the US they’re on the second or third cycle of biotech entrepreneurs, we’re still on our first or second, which is why they have the confidence to invest more capital into their ventures. In the UK, we have equally good science. We’re developing intellectual property, not for the NHS specifically, although they can access it. We’re developing drugs or therapeutics for a global marketplace. The IP that we file isn’t just for the UK, it’s always files for the EU, US and Japan and other geographies.”
He is keen to highlight that there isn’t a lack of investment opportunities in the space thanks to Pharma’s headquarters being located in Europe. Expanding further he adds:
“On our doorstep we have unbelievably good opportunities to invest. We can find great science and invest early, primarily because we can do quite detailed due diligence due to our background in life sciences.”
“On our doorstep we have unbelievably good opportunities to invest. We can find great science and invest early, primarily because we can do quite detailed due diligence due to our background in life sciences. We can then invest in opportunities that we think Big Pharma would like to buy. As part of our process, we’ll often call up Big Pharma and say, ‘look, we’re seeing this, have you seen it before? Is it the kind of thing that if the science works you might want to collaborate with?’ We’re literally trying, from the very beginning, to gear up a company for some kind of collaboration or trade sale to Big Pharma.”
Sunil is seeing the biotech space following a similar pattern to the tech space in terms of changes and growth.
“What happened in tech in the last 10 or 15 years is now happening in the biotech space. We have large companies in our space that are very acquisitive, looking to collaborate and looking to partner. The trade and opportunities at an early stage are a lot more than they were 10 years ago and that’s where we think the opportunity is. On the back of that we thought that’s a good remit for a EIS Biotechnology Therapeutics Fund. We really enjoy investing, we like the innovation stage and all the real innovation happens early.”
Excited by research being carried out with a well-validated target, Sunil says that o2h can add value and invest at an earlier stage than other investors would consider.
“Taking it through that research phase is where we feel we can add a lot of value and after that is when all the larger Series A and Series B will feel far more comfortable to buy in. The early phase is where investors see greatest risk. This is our window to invest. We feel we have a better understanding than most of taking it through that research phase quickly and then looking for an exit opportunity at the end of that research phase. You can go up from a six-digit valuation or low seven-digit valuation to say at least a £10 million valuation in that time period and still leave plenty of upside on the table for future investors in larger Seed or Series A. Many investors like to invest after the research phase in-part because they think it’s too risky or it’s too early but because we’ve been playing in that space for 15 + years we understand that risk and we feel that we have enough knowledge and networks to be able to drive through that early stage quickly and get an asset clinic-ready.”
Adding credibility to Sunil’s experience is his award wins this year. Not only did he win Angel of the Year at the UKBAA Angel Investment Awards, he also recently was awarded the Special Recognition Award at the OBN Awards for his support in the growth of early stage biotech in the UK.
“Winning Angel of the Year makes us very proud, I believe we are very lucky that we are recognised for doing something that we enjoy doing with a social benefit as well as being able to build sustainable profitable enterprises. The award gives us validation that we are credible investors and great exposure to further deal flow and opportunities. The Special Contribution Award was a really special award for me. The biotech industry is something I’ve been working in the past 18 years so to be recognised for my contributions to that sector amongst 300 of my peers was moving.”
Sunil is optimistic that the upcoming General Election and impending potential Brexit won’t negatively impact the biotech sector. Explaining his standpoint Sunil expands:
“The biotech sector is one that attracts high value jobs. It’s an area where we punch way above our weight compared with any other country in Europe and we’re second to the US. Our science is equally as good and it’s an area where we can have a massive impact in the economy. I do think it’s going to get a lot of attention from government. We are also very well-protected by EIS. Biotech is an area where there is a perception of high risk but EIS helps. The angels have really stepped into this area. They do a lot of heavy lifting, which I feel is important for our ecosystem and I think can be very well rewarded if you invest in biotech therapeutics.”
With a wealth of experience under his belt, Sunil shares the biggest lesson he’s learned along his journey as an angel investor.
“It’s really important after you’ve made your investment to not worry about the exit. Just build a really good business with good values, with a great culture and team and build a real company and real business. Obsessing over the exit in every board meeting isn’t healthy. An exit opportunity will come to you or you’ll know when it’s the right time to approach companies, then you’ll actually get a good exit and much larger than if you just keep chasing it. Know that there is a potential exit, when you invest and then just focus on building the business.”
Find out more about o2h Group and what they do at http://o2h.com.
Get buy one get one half price tickets for our Future Forward event taking place on 27th November in London at https://www.eventbrite.co.uk/e/future-forward-tickets-68455027831.
Want to learn more about angel investing? Enrol in our course The Effective Angel Investor at http://bizangels.thinkific.com.