Tate & Lyle Ventures, the VC arm of the UK food company, has exited its investment in Lumora, a UK-based food safety technology company, as the VC firm’s Fund I draws to a close. The company, which has developed a molecular diagnostic platform to identify and quantify certain pathogens, was bought by German healthcare conglomerate ERBA Diagnostics Mannheim (ERBA).
While still believing in the merits of the food safety segment, Tate & Lyle’s recently-launched £30 million ($45 million) Fund II will focus more closely on food science and nutrition.
“We are looking now a little more at diagnostic and medical technologies that enable consumers to live a healthier life,” Simon Barnes managing partner of Tate & Lyle’s outsourced asset manager Circadia Ventures, told AgFunderNews.
Tate & Lyle invested into Lumora in 2007, as the company’s first VC investor, after identifying food safety as a key area of focus for Fund I, which closed on £25 million in 2006.
“I think the trends in food safety are — as they have been for a couple years — faster testing, quicker results, and, importantly, the ability to prepare samples quickly and simply without the need for complex sample preparation procedures. This means they can be done in perhaps a factory setting or, in the clinical sense, out in the field,” said Barnes.
But what really appealed about Lumora was its potential application into other areas, such as clinical and health-related diagnostics.
“In the technology, we saw something that we thought was a real platform that could be applied to a whole range of issues,” he said. “Obviously food safety was our starting point, but we thought this is a really fundamental piece of technology that can be applied elsewhere. For us, that is an important part of a VC deal.”
Tate & Lyle invested £2 million in the Series A round, alongside Cambridge University’s venture fund Cambridge Enterprise, and a further £1.5 million at Series B alongside Catapult Ventures, another UK firm.
“Back in 2006, when we launched the fund, one of the areas that we identified was food safety, which historically has been an issue of great concern to the food industry and we were interested in trying to find companies developing rapid food safety tests for common food pathogens,” said Barnes. “We looked at probably 10 companies or so, all over the place, and we had some contacts into the Department of Technology at Cambridge and we came across Lumora. It was very early stage—the company had received some angel funding and investment from the University of Cambridge [where it had been developing prototypes].”
In 2011, Lumora licenced their food safety platform to 3M, the global science and innovation giant, involved its bioluminescent Assay in Real Time, or BART, technology. This reporting system, then exclusive to the company, served as a tool in molecular diagnostics and offered a simple, affordable, and robust hardware solution to detect food safety concerns.
The licensing agreement with 3M allowed Lumora to turn its attention to a new phase of development and its ability to move beyond pure food safety was revealed, according to Barnes.
“The company migrated to more clinical diagnostics and that was the second phase of things really; when the fact that it was a real technology platform came to the fore. In the end, our original idea, or hunch, that this was a real platform to be applied to a whole sequence of areas, was correct.”
The exit sale to ERBA also fulfills Tate & Lyle Venture’s anticipated journey for Lumora and illustrates the firm’s big picture approach to considering early stage investment opportunities. “I think we always believed that the company would be acquired for its technology as part of a bigger entity and I think it’s the right thing for the company,” explained Barnes. “They’ve become part of a bigger group that can roll the technology out into a new set of circumstances and that’s exactly the right thing for them. I think we always did believe it would become part of a bigger story.”
Only one company remains in Tate & Lyle Venture’s Fund I portfolio, a Scottish edible biofilm developer called BioFilm, which develops and manufactures fast dissolving films that can be used to help deliver nutraceuticals, medical devices or drugs through the mouth, the mucosal membrane, or even the skin. Fund I has exited its other two investments: Fugeia, which develops prebiotics based on wheat bran fiber, and Allylix, which has a fermentation platform for flavours, fragrances and other specialty molecules.
Fund II made its first investment last month into Evolve BioSystems, a microbiome spin-out company from the University of California Davis which is developing probiotic and prebiotic products for newborns. Fund II will focus more on food science and nutrition as Barnes hopes to take advantage of increasing consumer interest in health and wellness.
“The core of the fund is very much more about food ingredients, everything from sweeteners through to proteins through to all sorts of health and wellness related technologies,” he said.
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