It turns out that building a fund is not that different to running a startup. Going from the security of being an equity partner in a large patent attorney firm to setting up an early-stage life science investment fund may not seem like the most obvious career path to some. But to Damian Slizys, patent attorney, holder of a chemistry PhD and now founder of Kobold Ventures, it was a natural progression.

His new fund, which invests in early stage Australian life sciences companies, is about to start raising capital.

“It takes the best parts of what I was doing of a patent attorney – assessing whether new technologies have an advantage over others – but just looks at them in terms of investment,” Slizys says.

Setting up the fund has meant starting from scratch to establish the investment vehicle and find the right people for the advisory board and the investment committee.

“Essentially it’s like running a startup. There are lots of hurdles to jump and people fall away and come into play. It’s in a state of constant flux but that’s what I enjoy about it.”

So, what has he learned so far about setting up a fund?

“First and foremost, I picked a market I know,” he says.

“One of my advantages is that I know this industry very well; not just how it works but also the people within it. It means I can invest in people I know or people I can readily find out about.”

He stresses the importance of those networks to hear about opportunities.

“It would have been pretty embarrassing to have set up a fund and then not had anything to invest in!” he says.

Building a strong team has been another key focus for Slizys, who has around nine other people working with him in the fund.

“Early-stage investment in life sciences is a narrow sector,” he says. “Finding a well-balanced team was all about word-of-mouth. I’ve managed to find a team with the broad range of experience we need, from people who have worked on-the-ground developing drugs or therapeutics to those with legal and commercial backgrounds.

“They’re people who are interested and engaged and willing to put their time in knowing that any returns will be at the back-end of the process.”

And then there’s actually raising the capital the fund needs to start investing.

“It’s a complex, esoteric and technical space, which can be hard to follow,” says Slizys.

“But there are also a lot of opportunities going begging. So the team have worked very hard on our presentation so that it resonates with investors.”

Slizys and his colleagues have established their ‘investment thesis’; the key criteria they will apply to their investment decision making. In particular they’re looking for good science, a strong patent position and a strong management team.

The team has developed a clear process for assessing these criteria to reach an investment decision, including undertaking a commercial review, due diligence and approval by an experienced investment committee.

“We include an intellectual property review in the process, drawing on my expertise, which isn’t normally brought into play in early stage investing but really adds value.” Slizys continues.

“In the life sciences, a company’s value is all about their intellectual property, particularly in the early stages,” he explains. “And a strong management team who can get the therapeutic closer to market and therefore add value before an exit is very important, too.”

Slizys says he’s really enjoying his change of career, and excited about the opportunities that lie ahead.

“The sector has responded very positively so far,” he says.

“There’s not enough investment in this space in Australia at the moment, and everyone wants to see more companies succeed. More early-stage investment would really help achieve that.”