Tikehau and Sprim are aiming for two more closings, which would bring TKS1 to as much as US$75 million by the second-half of this year.
Bruno de Pampelonne, chairman of Tikehau Investment Management, told The Business Times that “the strategy of the fund is early-stage”.
“Valuations are much more attractive at a very early stage. As we can validate the scientific principles, and the fact that there is a market for these products, that makes for us a very strong competitive advantage.”
TKS1 has invested around US$30 million so far, across seven companies. They are tackling issues such as managing clinical trials by mobile app, delivering therapeutics across the blood-brain barrier, and leveraging artificial intelligence to analyse medical research.
Sprim co-founder Michael Shleifer told BT that the TKS1 fund is “more into B2B (business-to-business), enterprise” than the direct consumer market. “We have a little bit of biotech, but we don’t want to over-commit to it,” he said.
But Dr Shleifer was firm that “hardware is really kind of a nope” for the fund, with Mr de Pampelonne citing the “huge capex” needed for the devices segment as the key turn-off.
Depending on how TKS1 performs and when the piggy bank empties, Mr de Pampelonne said that subsequent funds could be launched in about one-and-a-half to three years’ time. “We have a rule where we don’t launch a second fund if the first one is not at least 75 per cent invested,” he explained.
“Obviously, at the second phase of the fund, when the company will reach a stage of maturity, then we are going to look for co-investors. But for the time being, we’re looking more for both academic partners and startups.”
For instance, one company in the TKS1 portfolio is Travecta Therapeutics – a drug discovery company that taps the work of Duke-NUS Medical School professor David Silver.
When asked about public venture platforms already in existence – such as the Singapore Economic Development Board’s EDBI unit, or the Agency for Science, Technology and Research’s ETPL – Mr de Pampelonne said: “We clearly operate in full partnership with those guys. If we manage to take the things out of academia into this partnership – combined partnership, public-private sector – it could be extremely powerful for Singapore.”
He also noted that state investment firm Temasek Holdings is already a shareholder in Tikehau, which controls the manager of Singapore-listed real estate investment trust IREIT Global. Temasek was part of a round of investors that pumped 510 million euros (S$827 million) into Tikehau in July 2016.
What about competition among funds in the private market?
Mr de Pampelonne said: “The space is large enough for all of us and it’s always clear that we have worked with partners, so that’s fine.”
TKS1 is differentiated by the blend of Tikehau’s financial know-how and Sprim’s scientific chops, he argued. “So it’s very different from a classical VC fund, where often you’re going to have a couple of finance guys, maybe one or two doctors, and here we go.”