A Who’s who of Perth’s finance luminaries are backing a new company that aims to shake up the way investors think about venture capital.
A Who’s who of Perth’s finance luminaries are backing a new company that aims to shake up the way investors think about venture capital.
John Poynton, Charles Fear, Dalton Gooding and Edward Tait are among 25 investors who are backing Gateway Capital, which plans to list on the Australian Stock Exchange late this year or early next year.
Gateway is the brainchild of company director Charlie Morgan, who is turning his personal passion for backing new ventures into a structured business.
The company, which aims to float three or four biotechnology companies every year, is built on the premise that the ASX is the true source of risk capital in Australia.
“We have set up a professional team so that we can have a pipeline of deals to take to the market,” Mr Morgan told WA Business News.
Gateway will not be an investor; its role is closer to that of a merchant bank, advising on and structuring deals.
“We will package up the technology, do the term sheets, put in management, prepare a business plan,” Mr Morgan said.
Gateway will take its payment in the form of shares, and then distribute the shares ‘in specie’ to its own shareholders at no cost.
“If we can put out three listings a year, our investors are going to do very well,” Mr Morgan said.
The company has raised $1 million in seed capital and will receive additional money when it floats, but raising money is not the main reason for the float.
“We are looking to list to get a spread of shareholders, because that will help us in our business of listing biotech companies,” Mr Morgan said.
Gateway aims to be the partner of choice for universities and education institutions seeking to commercialise new technologies.
It has recruited pharmaceutical and venture capital executive Guy Heathers – whose past employers include Hoffman-La Roche in the US – as its chief executive.
Titan Bioventures managing director Harry Karelis, who runs the $47 million BioTech Capital private equity fund, will also be closely involved as a director.
Mr Gooding, a partner at accounting firm Gooding Pervan and chairman of Clinical Cell Culture, will be chairman of Gateway.
Mr Tait, the former State manager of Macquarie Bank who recently set up Tait Farrow Azure Investment Partners, will be the fifth director.
Mr Karelis is confident Gateway will fill a niche in the Australian market.
“There are good ideas coming out, there is plenty of risk capital on the ASX, and the venture capital market is not very deep or mature,” Mr Karelis said.
“It will be an efficient, high quality conduit for taking technology inventors to the market.”
He said the Gateway concept was ideal for Australia, which had a long history of backing high-risk floats, whether in the mining or technology sectors.
He believes most inventors with ‘early stage’ technology would be better off floating their company rather than seeking venture capital.
“You will get a better valuation, with less strings attached, and you don’t have to give up 90 per cent of the company,” Mr Karelis said.
While Gateway will focus primarily on Australia, it will also look overseas for potential opportunities.
Mr Morgan, who is currently chairman of Nido Petroleum, has become increasingly involved in the technology sector over the past six years.
His first technology deal, in concert with Harold Clough’s Techstart fund, involved the CSIRO-developed VectoGen technology, which was subsequently acquired by ASX-listed Imugene.
Gateway’s first, small deal, Providex Therapeutics, illustrates its mode of operation.
Providex holds the rights to CSIRO-developed intellectual property that can be used in the treatment of prostate cancer and other diseases.
ASX-listed shell company Q-Vis is in the process of acquiring a majority stake in Providex and plans to raise $5.4 million to provide working capital.
CSIRO and French company Gencell will also hold equity in Providex in return for granting access to their technology.
Biotechnology and pharmaceutical executive Dr Julie-Anne White has been recruited as managing director of Q-Vis, which plans to change its name to Salus Technologies.
Mr Morgan believes building teams of good people is a key ingredient in successful commercialisation.
“I’ts exciting to have good people around, that’s when things really start to happen,” he said.
He also recognises that investing in technology is high risk.
“They are not all going to work, you have to remember that. But what they have got is the blue sky, that’s what makes it exciting.”
