Bracebridge Corporate Finance talk to Peter Dines, an entrepreneur and Head of Life Sciences at Mercia Technologies

How did you get involved in the life sciences sector and early stage investing?

I have nearly 25 years’ experience working in the life sciences sector.  I started my career in sales in pharma and medical devices before re-mortgaging my house to buy in to a Redditch based medical devices supplier called Surgicraft. This was a turnaround situation and proved to be invaluable experience. As Managing Director, I was able to build on my previous sales and marketing experience with financing and operational experience. We raised equity, debt and grant funding and we developed and launched products in the US and other international markets, giving exposure to FDA and other regulatory requirements. We also developed our manufacturing capability in-house and outsourced some of the manufacturing.  This steep learning curve gave me a great insight into how I could help other early stage businesses.

What would you see as your key successes to date?

I led the sale of the Surgicraft Obstetric product range to Rocket Medical in 2007. I then acquired the UK distribution assets to form Surgi C where we tripled the sales and successfully exited the business in a replacement capital deal with a PE house.  For the past five years, I have been active in the early stage life sciences space as an angel investor where I would often take a place on the board to support the founders.  I invested in a NHS ultrasound provider in 2012 and we achieved a successful partial exit supported by Bracebridge Corporate Finance in 2014.  Interestingly we have since bought the business back and we are now following a strategy to buy and build a health service provider with technology transformation at its core.

What lessons have you learned?

I have learned many lessons both as a Chief Executive and now as an active investor, but in summary is it is all about people.  As a CEO, you have to be very people focused to build a great team and get the best out of them.  As an investor it is exactly the same, I am backing the management team to execute their plan – where I lose an investment it could be that the technology fails or the market isn’t ready but most times it’s because there was an issue with management and the leadership of the business. I think it’s important that founder entrepreneurs are self-aware enough to know their weaknesses and ensure that a team is built with complementary strengths. As an example, a founder academic whose lifetime research work that develops a technology will not have the commercial skills and experience to drive an international sales expansion plan but when combined with a team that has, as well as finance, regulatory and operations experiences, it can be powerful.

Tell us about your role at Mercia

I was invited to join Mercia as Head of Life Sciences shortly after the company’s IPO on AIM in December 2014.  This was initially a part time role around my other commitments and has now grown into a full-time role, as in 2016 I took on additional responsibility as the EIS Fund Manager.  Mercia is itself a fast- growing company with a team of more than 75 people. We currently have a portfolio of 26 investments in the life sciences sector within the managed funds and 6 on the balance sheet that include a synthetic biology company, Oxford Genetics, a novel drug delivery company, Medherant, a female health diagnostic company, Concepta and digital eye care device company, Aston Eyetech.

Where are you looking to invest in the life sciences sector?

Mercia have a number of University relationships in the Midlands, North and Scotland where we actively look to back technology-rich innovations.  In addition, we have active deal flow from non- University sources in medical devices, diagnostics, drug delivery, digital/e-health and pharma support services. Life Sciences is a wide area and the only sub-sector we do not invest in is drug discovery as it is very binary/high risk and generally doesn’t fit our fund structure.

We typically invest as little as £250k in the first seed tranche but provide up to £7m to support a company as it scales.

What stage of funding does Mercia provide?

The attraction of joining the Mercia team is the investment model, which provides seed/early stage capital and then the follow-on funds to further scale the business at series A/B as well as support for the companies from a team with backgrounds both similar and complementary to mine.  Most companies have the challenge that funders are either seed stage funders and do not have the ability to provide follow on funding, or they are series A funders and want a company to meet certain milestones before being investment ready.  The Mercia model is very attractive to founders as raising money is incredibly time consuming and distracting so we can hopefully help reduce this.  We manage a number of funds that provide early stage equity such as Northern Powerhouse, Midlands Engine Room and Mercia EIS Funds before investing in portfolio directly from our balance sheet.  Mercia also have a private equity fund looking to back small cap PE deals and a debt fund so we have many ways of investing in a variety of growing UK businesses.

For further information on Mercia, please visit https://www.merciatech.co.uk/ or contact Peter at peter.dines@merciatech.co.uk.