Epidarex Capital II: Interim Review

In 2013 Scottish Enterprise became a Limited Partner in the Epidarex II Life Sciences Investment Fund. The Fund invests in Life Sciences companies with an emphasis on those spun-out from universities or research institutions. Given the time needed to take a company from start-up to exit, the emphasis of the Interim Review is on assessing administration, management and progress to date of the Fund rather than attempting to estimate its economic impact.

The methodology involved desk research, data analysis and interviews with Epidarex staff, Partners and investees.

By June 2019 the Fund had invested £33.685 million in 12 companies. Of these 6 were Scottish based, 4 in England and 2 in Germany. SE’s objectives for the Fund were to: help set up a Scottish-based Life Sciences investor; provide a specialist source of investment for Scottish Life Sciences companies; and encourage Venture Capitalists, and other international investors, to invest in Scotland. Underpinning these broad objectives were several Key Project Outcomes such as investing in 8 Scottish based Life Sciences SMEs. When assessed against the measurable metrics, delivery progress was assessed as being good. The view of the Limited Partners was that the Fund was well run and managed. Key positives were: the responsiveness of the Epidarex Team, their technical and financial expertise and the contacts the Team had in the investment and Life Sciences communities. The 6 Scottish companies in which investments had been made were broadly of the view that without the Fund it was unlikely that they would have started. The overwhelming view of the interviewees was that the setting up of Epidarex had had a positive effect on the Scottish funding environment for start-up Life Sciences companies.

The Recommendations did not relate specifically to the Fund’s operations but to the wider funding and investment environment in which it operates. They included such things as the suitability of public bodies investing in Life Sciences companies as the economic development benefits may be uncertain, long term and the opportunity costs considerable. If these investments are to be made what can be done to embed these companies into the economy? There are also issues about the need to develop Scotland’s people resources so that there is local talent to set up and develop Life Sciences companies rather than bring expertise from elsewhere.