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