Pioneering Healthcare Innovation relies on Regional Collaboration
Q&A with Jason Mellad, CEO and Co-Founder, Start Codon
1. What does an accelerator do, and how does Start Codon fit into the innovation ecosystem within the Oxford-Cambridge Arc?
Unlike traditional accelerators, Start Codon is a venture builder that provides the firm foundation that businesses need to propel them along their growth journey. We are one step on a continuum between academic research, business formation and the start-up stage, accelerators driving the next phase of growth, and finally the maturation of a business into the SME stage with close links to venture capital and angel investors. One of the principal benefits of the Arc is that it includes all the elements a start-up needs at any stage of their business development journey, and we exist to facilitate and make each stage of as smooth as possible.
Ultimately venture builders and accelerators do what is says on the tin – it accelerates the progress and growth of companies, acting as a catalyst just like in a chemical reaction. This is not necessarily make-or-break for more resilient start-ups but is instead designed so that companies have a de-risked proposition for investment further down the line. Our expertise and mentorship combined with seed-stage funding helps businesses to become as attractive as possible to investors and collaborators from both the public and private sectors.
2. What sort of resources does Start Codon have to support life sciences and healthcare startups?
We offer a variety of resources, all designed to target areas where start-ups have the most need. This includes our own capital to ensure a flow of money at the crucial cash-strapped seed stage, but fundamentally the mentoring time of the Start Codon team and our resident subject matter experts. Our people have fundraised and struck deals within the health technology and life sciences sector before, and crucially they understand the context and needs of research-led start-ups.
Real estate can be another challenge for start-ups and spinouts, and we can also help them find office and laboratory space as they require, scaling this with real estate enablers as businesses grow and have new real estate needs. We also cannot underestimate the importance of giving start-ups access to our network of amazingly successful entrepreneurs and business minds. Start Codon has created a community – we now have 19 companies in our portfolio, adding ten companies per year – and we want start-ups to view the Arc as a community of their peers, where they can learn, connect and discover opportunities.
When working with a start-up we work to flesh out their business plan and team – building a solid and plausible offering to venture capital and further financing. We also help them apply for Innovate UK grants and other public sector funding, using our pre-existing relationships with organisations and our deep knowledge of how this ecosystem works. Whatever a start-up needs – including emotional support for founders working through the stress of starting a new business – we can ultimately provide.
3. In your experience, what are the key needs and constraints for start-ups and spinouts?
In the early days, the team is disproportionately important. We have worked with many start-ups with deep tech and academic backgrounds, where they have already had years of university funding and multiple scholarly publications, but what they really need a commercially savvy team to help things get off the ground. Even if they have less robust technology or a less brilliant product on paper, a stronger team is the most important aspect to drive sustainable and lasting success. Dynamic and capable teams really help to minimise risk in an asset for investors and for ourselves.
Another key constraint is product market fit. Start-up founders can sometimes assume an advanced and impressive technology will make a viable product – but it’s an understanding of the commercial side, and where the unmet needs are for the right product solutions, which accelerators and mentorship schemes can provide.
There are perennial reasons start-ups fail: team that doesn’t work, poor market fit, and running out of cash. Start Codon and other similar programmes give start-ups sufficient finance and mentorship and identify follow-on investors to give them the capital to achieve key milestones in the journey to resilient and sustainable growth.
4. What do you think the benefits are for a new start-up or spin-out in partnering with an accelerator like Start Codon?
There are plenty of start-ups out there who decided to go it alone and were successful, but proportionally they are quite rare. Being part of a community increases the chance of success, as does a tried-and-tested pathway for growth. It’s key to understand that not all programmes are created equal, but research from Beauhurst in 2018 found that companies that use accelerators raise 44% more money than those that don’t, and are also 75% more valuable.
Many research-led start-ups emerge from the Arc’s universities, and their founders have a lack of experience of commercial practise and the knowledge of what it takes to grow a business. They may have a great idea, but they need support in forming a company, funding to achieve a proof of concept, and mentorship until they can achieve an exit with a continuing relationship with their peers and with potential sources of capital. Being introduced to the right contacts by accelerators means they can get to the nitty-gritty of research and development free from the worries and difficulties of business development.
As much as possible, Start Codon removes the necessity for start-ups to begin from scratch, duplicating effort and learning processes across start-ups, and instead provides a signposted path for them to follow.
5. How do your partners, like Cancer Research, benefit from this approach to nurturing and cultivating start-ups?
I think previously there was a distinction between return-on-investment or ROI investing and impact investing that has largely broken down, and investors are increasingly viewing them as one and the same. No more so than in healthcare and the life sciences, we no longer see an either-or between impact and return, as enterprises and ideas with life-changing products and amazing potential are also increasingly highly profitable.
Our strategic partners like Cancer Research UK benefit from our experience in translating this amazing research to a clinical setting. There is a disproportionate amount of capital spent at the beginning of a funnel, but the amount of research and lifesaving solutions driven by this early step is exponential. We help in making the transition from a technology or a scientific observation into a new therapeutic or diagnostic that can transform patients’ lives.
StartCodon has always said that the number of lives saved, in addition to a return on investment, is a crucial measure of the technologies we invest in. We’re not just box-ticking to make a return, we have been given an opportunity in the Arc to genuinely contribute to saving lives.
6. What makes the Oxford-Cambridge Arc an attractive place for accelerators to operate? What is it that draws investment into the region?
The deal flow in the Arc is outstanding, and the supporting resources even more so. The close spatial dynamics of the Arc enable researchers and entrepreneurs to interact with their peers and a high concentration of likeminded individuals. This allows for a cross-pollination of ideas between sectors and industries – battery technology feeding into aerospace or motorsport, or sensor production providing local authorities with smart city technology – which is one of the Arc’s major selling points.
For businesses the Arc is an outstanding place to be and one of the best clusters of its kind in the world. We want to ensure that access is given to those not physically present: Covid-19 has proved that a physical presence isn’t always necessary to do business, and for the Arc to reach its full potential we can’t go it alone. We are focussed on supporting UK biotech as a whole, including the Arc, and for those in the rest of the country we can also act as their entry point to the region. We would love for them to set up shop locally, but we help other UK and international enterprises make connections into the Arc even for those not physically located here. To reach its full potential, global investment and interest has to flow into the Arc – Start Codon has recently begun its first collaboration with the sovereign wealth fund of Singapore, and connections like that are absolutely vital if the Arc is to continue to grow.
7. What does the future of life sciences and healthcare look like?
I’m particularly passionate that the innovations produced by businesses in the Arc are deployed to help British patients. Too often companies from the UK or internationally utilise NHS resources and goodwill to discover new drugs and develop diagnostic tests, but that technology isn’t deployed locally for years and the UK doesn’t reap the full benefits. If the residents of the Arc are going to be convinced of tis potential, innovation has to spill over into local communities. We need to make sure the Arc leads the way in innovation, but also in deployment and access, to help the population of the Arc and of the UK – improving healthcare outcomes and ensuring the NHS benefits from the research it supports.
The region is often compared to the Bay Area and Boston clusters in the US, but I can see the Arc potentially surpassing both in the future. What we have is a mature and developed ecosystem and pathway from world-class universities to start-up support and accelerators like Start Codon, all the way to major sources of investment and venture capital and the support of vast multinationals like AstraZeneca. Helped by accelerators, the Arc is one of the best places globally to translate your research into a successful business.