Venture capital on a shoestring: Bioventures' pioneering life sciences fund in South Africa
Authors Hassan Masum and Peter A. Singer examined the modest but promising success of Cape Town's Bioventures, a rare life sciences venture capital firm in sub-Saharan Africa, operating on a relative "shoestring" of US$12 million.
It has supported eight innovative South African firms since 2002, notably Disa Vascular, a creator of stents for heart patients.
Beyond providing funds, Bioventures' support to investees included board participation, contacts, and strategic services.
"Bioventures had to be proactive in finding and supporting good R&D, and not merely wait for the ideal company to walk through the door," the authors say.
"Providing hands-on support to early-stage health ventures posed problems due to the fund's relatively small size, overhead and management expenses were tightly constrained. Bioventures sometimes wasn't able to make follow-on investments, being forced instead to give up equity to raise follow-on investment capital."
The firm nonetheless "represents a significant accomplishment: creating a life sciences investment fund in Africa," the authors say. It has shown how a small African venture capital firm can successfully help create research and development-based health technology companies.
Among hurdles to be overcome by Disa Vascular: finding local people experienced in taking a new biomedical device through the European regulatory process, as well as breaking into international markets.
Partnering with a larger fund is among the recommendations, with local venture capital firms perhaps acting "as a sort of technology scout and early stage developer, with the larger fund being available for follow-on investments as successful investees grow."
The Bioventures experience also suggests that future health care technology funds targeting ailments of the poor mi
|Contact: Terry Collins|
McLaughlin-Rotman Centre for Global Health