Innovation
BiancaMed - - another tax-funded Irish university spinout bought by US firm; French VC makes 50% return
By Michael Hennigan, Founder and Editor of Finfacts
Jul 7, 2011 - 6:13 AM

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BiancaMed, has become the latest Irish university spinout to be bought by a US firm with the promoters and venture capital backers cashing out in a multi-million euro deal but unanswered questions remaining on the Irish taxpayer funding billions of euros in research but any young company with potential likely to be snapped up before significant value added is available for the Irish economy. One of the young company's venture capital (VC) funders said yesterday that it had made a 50% internal rate of return on its investment.

ResMed of San Diego, California, which is listed on the New York Stock Exchange and the Australian Stock Exchange, and is a developer, manufacturer and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders, on Wednesday announced the acquisition of BiancaMed, acquiring all shares for cash.

BiancaMed, a University College Dublin (UCD) spin-out company, was co-founded in 2003 by Dr Philip de Chazal, Dr Conor Hanley and Professor Conor Heneghan, to commercialise research undertaken in UCD’s School of Electrical, Electronic and Mechanical Engineering.

The Irish startup is headquartered in NovaUCD, the Innovation and Technology Transfer Centre at UCD and currently employs a staff of 29. Shareholders include Enterprise Ireland, DFJ ePlanet Ventures, Invest Northern Ireland, ResMed, Seventure Partners, founding directors, staff  and University College Dublin.

The founding directors are reported to plan to remain with the company under its new owners. However, as they no longer will have stakes in the operation, that is unlikely to be very long.

The deal value has not been disclosed but the French venture capital company Seventure which led a €6m Series B round in June 2009, said it will make an IRR (internal rate of return) of approximately 50% on completion of the sale.

BiancaMed represents the first investment that Seventure has made outside of continental Europe. "Conor Hanley, CEO BiancaMed, and his team have been very successful in bringing to market BiancaMed’s non contact sensor technology," commented Isabelle de Cremoux, head of Life Sciences and General Partner, Seventure. "On behalf of our investors, we thank the executive team for the excellent progress made and momentum built since we invested. The excellent investment return generated by this investment also justifies the strategic decision we made in 2009 to expand our pan European investment focus to include UK and Ireland."

BiancaMed has raised €11m in funding since it was founded in 2003.

The core of BiancaMed’s proprietary technology is a sensitive motion sensor that can detect respiration and movement without being connected to the human body. The sensor incorporates sophisticated biometric software that converts the motion data into measurements of sleep and breathing.

In 2010, two University of Limerick spinouts were acquired by US firms.

We wrote then that the Government has put faith and public money in its 'smart economy' strategy and Finfacts has raised questions about the plan first announced in 2006 to be recognised as a 'world class knowledge economy' by 2013.

It is not a surprise that startup high tech firms, after years of challenges, would aspire to be acquired by bigger US firms. However, while it may be a good move for the promoters and investors to cash-out, it highlights the difficulty of public policy in achieving the goal of developing and funding firms that can become scalable and contribute value-added back to the Irish economy.

It simply is a foolish strategy and earlier this year, the listed Norkom, was sold to BAE Systems, a unit of the UK defence giant.

The Irish public science annual budget is €2.5bn. 

Early stage takeover firms are usually motivated to acquire the technology not to build a big operation in Ireland.

SEE: Innovation: Ireland's 'smart economy' strategy, universities and free-lunch entrepreneurship


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