British Innovation Fund 1Q 1Q 202 2020 For discussion purposes with Professional Investors only
CONTENTS British Innovation Fund 3 Introduction 4 Executive summary 10 Investment premise 16 Investment pipeline 19 Conclusion 21 Appendices 2
INTRODUCTION Our objectives • Seeking investment for the British Innovation Fund Current investor universe UK pension schemes HNW individuals • Looking for investments of £5m-£25m – ability to shape individual portfolio at the higher end • Opportunity to invest in cutting edge spin-outs Target investor universe emanating from leading UK university research UK pension schemes Sovereign wealth funds Family offices • Spin-out companies already incubated – British HNW individuals Innovation Fund acts as an accelerator 3
EXECUTIVE SUMMARY Milltrust International Milltrust International Milltrust global AuM across all funds and Group (“ Milltrust ”): $321m strategies • Leading UK and Singapore -based 3,600+ Stocks held across six continents investment group Provider and investment • Founded in 2010 by manager for a range of experienced team of 18 Industry awards sustainable investment institutional investors solutions centred around: • Focussed on Ranked Global Emerging Markets equity • Global Emerging #1 sustainable investing strategy 1 Markets ; • Agriculture farmland ; Hectares of diversified land under 6,000+ • Science, technology & cultivation innovation ; and • Sustainable impact 19 Investment manager partnerships globally investments Note: 1 Morningstar, the FT and Bloomberg since strategy inception in July 2012 Credit: Icons made by Freepik, monkik and mavadee from www.flaticon.com 4
EXECUTIVE SUMMARY MAI overview The investment universe for the British Innovation Fund (“BIF”) is university The investment team has The farmland funds are Milltrust Agricultural commercialisation an average of 20 years’ focussed on agricultural Investments (“MAI”) is companies and spin-out investment management investments in the the advisor to Milltrust companies emanating experience and consists of southern hemisphere . The International Managed from UK universities . The knowledgeable investment approach capitalises on the Investments ICAV fund has specific expertise specialists and agricultural changing demographics of Australia and New within the areas of and scientific experts , the developing world, Zealand Buy & Lease agricultural technologies, comprising an executive aiming to provide investors Farmland Funds ; and the biotechnology, deep tech management team as well with an income generating, British Innovation Fund and life sciences as a panel of advisors inflation adjusted, long duration investment that is lowly correlated with other asset classes Credit: Icons made by Freepik, ultimatearm, Eucalyp and Icongeek26 from www.flaticon.com 5
EXECUTIVE SUMMARY 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 6
EXECUTIVE SUMMARY BIF to date Areas of speciality Key strengths Distinct investment universe identified, supporting healthcare and Agricultural Biotechnology technology focussed spin-outs Technologies Extensive relationships built with the following across the UK: - University research centres; - University commercialisation companies and incubators; - University spin-out networks; - Angel investor groups; and - Venture capital investors. Deep tech Life Sciences Invested in Roslin and OSI alongside the likes of Lansdowne Partners; Blue Pool; IP Group; JB Equity; Temasek; and Wellcome Trust The spin-out space is receiving serious investment – since 2015 Milltrust has built a unique position to maximise the significant opportunities on offer through the BIF Credit: Icons made by smalllikart, Eucalyp and Freepik from www.flaticon.com 7
EXECUTIVE SUMMARY Core team Griff Williams, CFA Simon Hopkins Guy Pengelley CEO & CIO, Milltrust Agricultural CEO & Founder, Milltrust Investment Director, British Investments International Group Innovation Fund • Primarily responsible for • Senior figure in the investment • Primarily responsible for advising Milltrust International, management industry for more developing the British the investment manager, on the than three decades Innovation Fund • Founded Fortune Group, a multi • Previously worked in corporate British Innovation Fund and the MAI Buy & Lease Funds asset class advisory firm which finance at Peel Hunt, having • Previously Head of Europe and was sold to Close Brothers Group completed the ACA qualification interim CEO at Itau Asset plc in 2006, following senior roles at Deloitte within Financial Management in London at UBS, HSBC and Nomura Advisory 8
EXECUTIVE SUMMARY Core team Alexander Kalis Gary Thornton Managing Partner, Milltrust Head of Finance and Operations, International Group Milltrust International Group • Head of Investments and Senior Portfolio • Accounting and finance professional with over Manager for the MAI Buy & Lease Funds and two decades of experience • Previously Head of Finance and Operations the British Innovation Fund • Nearly two decades of experience at top-tier within the institutional team at Close Asset asset management firms including Edmond de Management having been Finance Director at Rothschild Asset Management and Santander Fortune Asset Management 9
INVESTMENT PREMISE Rationale Key statistics British Innovation Fund (“BIF”) rationale UK universities in top UK universities struggling to raise capital to commercialise world 10 of global rankings class research 4 (Oxford; Cambridge; UCL; and Imperial 1 ) 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 rankings 1 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 universities in the UK 2 revenue Source: 1 QS World University Rankings Advanced ideas reside in academia – incubators search these out 2020; and Higher Education Business; 2 Community Interaction (HEBCI) surveys and come to us for acceleration funding once proven 2002/03 - 2017/18 10
INVESTMENT PREMISE Rationale Five year survival rates : Spin-outs outperform the broader start up universe 43% for general population of new 100% enterprises in the UK versus 76% for Five year survival rate (%) university spin-outs 1 80% USO 2 survival rate data differs 3 , but 60% remains ahead of the ONS survival rate for the general business 40% population: 20% • Spinouts UK – 60% 0% • USO database – 61% • Gateway to Research – 75% • Beauhurst – 88% Note: 1 Office for National Statistics; 2 USO = USOs General business population University spin-out ; and 3 Overall 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 11
INVESTMENT PREMISE Origination Incubators and University University investment Investor network of angels Commercialisation network and VCs Companies (“UCCs”) • University bring IP / commercial • University networks host • Frequent communication with ideas to the UCC and incubators monthly investment and other investment professionals, • Experienced teams at the UCC networking events sharing ideas and opportunities • Correspondence showcasing • BIF able to participate in both and incubators invest into most promising and share with the BIF promising companies outside of initial and subsequent rounds • BIF team and advisory • Key relationships: these events • Access to online platform with committee assess recommendations before all spin-out investment deploying capital opportunities • Additionally, UCCs and incubators provide mentorship to spin-outs 12
INVESTMENT PREMISE 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 Membership of key networks: Minerva Bath, Bristol, Exeter, MICRA Southampton and Surrey Cambridge Capital Group Universities located in the cities London Technology Club of Cambridge, London and Oxford 13
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