In rare IPO by a VC shop, Draper Esprit raises £102M

("London Stock Exchange" (CC BY 2.0) by jam_90s)

Draper Esprit (LON:GROW) has raised £102 million ($145 million) through a listing of its stock on exchanges in London and Dublin. The listings, which represent a rare foray by a VC shop onto public markets, are intended to enable Draper Esprit to make long-term bets on European companies and give individual investors a way to back venture-stage businesses.

London, U.K.-based Draper Esprit, which lists a handful of biotech and life science companies in its portfolio of past and present investments, pulled off the IPO with the support of Neil Woodford’s Patient Capital Trust. In doing so, Woodford has helped Draper Esprit move toward a business model designed to echo his own “patient capital” investing approach, in which long-term bets are made on companies. Draper Esprit plans to make 10 to 20 investments a year.

The intention is to invest in these companies for longer periods of time than are typically targeted by VCs. In doing so, Draper Esprit thinks it can help to support the growth of large, privately-owned companies, the sort of businesses that Europe has historically struggled to sustain. With Draper Capital joining a growing pool of investors willing to back large growth capital rounds, the expectation is that fewer firms will be forced to sell up or IPO prematurely.

Many of these companies will work in sectors other than biotech--“systems and semiconductors” is the largest section of Draper Esprit’s portfolio--but the investor has shown a willingness to put cash into life sciences. Kiadis Pharma, a Dutch cell-based immunotherapy company, is the only pure play biotech in the portfolio, although research tools provider Horizon Discovery (LON:HZD), another of Draper Esprit’s investments, has also dipped its toes into drug discovery and development.

While biotech is just one of the sectors targeted by Draper Esprit, it, and particularly the groups that invest in it, have provided inspiration for its IPO. VC IPOs are rarer than the unicorns such investors pursue, but the U.K. is home to multiple publicly-traded investors in university spinouts, such as Imperial Innovations (LON:IVO) and IP Group (LON:IPO). Draper Esprit sees its IPO as a twist on the model pursued by these organizations.

“The university groups have grown to a $1 billion market cap, transforming biotech,” Draper Esprit CEO Simon Cook told The Telegraph. “But they focus on the intellectual property coming out of universities and then create management around it. We start with the entrepreneurs not the IP.”

- read Draper Esprit’s post

- here’s CNBC’s take

- and The Telegraph’s piece