A newly launched $7.5 million fund will provide startup capital to University of California entrepreneurial researchers through a collaboration with The California Institute of Quantitative Biosciences to translate their discoveries into commercial products and biomedical therapies.

 

This is the first fund for Mission Bay Capital, a San Francisco-based firm that was created in August to make early-stage investments in bioscience companies. The firm is independent of both QB3 and the UC system, but will invest in bioscience companies stemming from UC research. The current fund aims to support up to 15 companies with an average of $500,000 in seed funding. It also seeks to bring public attention to UC science and attract the attention of other venture capital firms to participate in investing in these companies. The fund is designed to return 20 percent of the profits from the investments to populate subsequent Mission Bay Capital funds and to build an endowment for QB3, to support the institute’s research and educational mission.

 

The Mission Bay Capital Fund is expected to become a key element of QB3 efforts to help UC scientists translate their research into commercial products and biomedical therapies. While the state of California established QB3 to tackle complex questions of biology through an interdisciplinary approach that combines the quantitative sciences, its mandate gave a nod to the dismal science of economics. The state charged the institute with accelerating the transfer of inventions from universities to the marketplace to benefit both patients and the California economy.

 

QB3, which is headquartered at the University of California, San Francisco’s Mission Bay campus and has facilities at the University of California, Berkeley and University of California, Santa Cruz campuses, has previously rolled out initiatives to help researchers commercialize their ideas and to make it easier for industry to work with researchers including the establishment of incubator space within its research facilities. The institute also created the QB3 Innovation Toolkit, which provides access to the legal, management and investment expertise critical to avoiding many of the initial mistakes that often derail startups.

 

Since 2003, QB3 has helped launch 21 startup bioscience companies on the UCSF Mission Bay campus and its surrounding neighborhood, including four that have successfully landed follow-on funding or were purchased by larger companies. Twelve of those companies were launched in the past year.

 

Reg Kelly, executive director of QB3 and an unpaid director of Mission Bay Capital, says companies will be considered based on both their likelihood of commercial success and potential benefit to society. “American taxpayers provide billions of dollars per year for scientific research in the hopes of having it pay off to society by creating the technologies and medicines of the future,” says Kelly. “This funding is absolutely critical for the entrepreneurs who are trying to do that.”

 

Though there is an impressive history of UC scientists creating biotechnology companies – an estimated one in three biotechnology companies in California has a UC scientist as a founder – the changing financing landscape has made it difficult for entrepreneurial scientists to raise money to translate basic research into products and therapies.  

 

 “There is a tremendous amount of bioscience research in the UC system that is perfectly suited for seed-stage funding,” says Brook Byers, a founding partner of venture firm Kleiner Perkins Caufield & Byers, who serves on the pro bono Mission Bay Capital investment advisory committee. “We’re hoping this fund could be a long-term solution to that problem, a model for other universities nationwide, and a way of attracting more venture capital interest in UC projects.”

 

The Mission Bay Capital Fund includes two categories of limited partners: for-profit partners and philanthropists. Philanthropic partners invest in the fund to support QB3’s mission of strengthening bioscience education and research, developing technologies to benefit the public good, and fostering economic growth. Those partners contribute to the fund via a gift to the UCSF Foundation.

 

Limited partners in the fund include Pfizer Inc.; John Wadsworth, Jr., of Manitou Ventures; and law firm Wilson Sonsini Goodrich & Rosati Investments, among others. Wilson Sonsini also is providing legal counsel to the entrepreneurs.

 

Mission Bay Capital is currently reviewing business plans from a number of QB3 and UC-related researchers.