The value of CID4 to our portfolio companies and the greater Colorado life science ecosystem goes beyond simply deploying capital. We use the term Active Business Management (ABM) to describe our participatory role in assisting to move technology from the bench to the market. The life-blood of the early-stage bioscience entity, the fuel for the engine or what is sometimes referred to in the lab as well as in the boardroom as the green enzyme is one area in where our focus has started to drive results in the form of follow-on capital.
The financial resources CID4 are able to deploy are limited relative to a multimillion dollar venture backed series A financing that most of our Project companies will ultimately pursue. This should come as no surprise as CID4 is not a returns-based venture fund. Rather our mission is economic development through innovation advancement – tasked to grow the Colorado bioscience ecosystem through company creation and job growth. Despite these relative capital constraints there is demonstrable opportunity to leverage the intellectual property assets within the State. The opportunities for leverage are as diverse as the companies with which CID4 works with. One of the greatest ABM contributions offered by CID4’s presence on our Project companies' boards is the ability to help management craft a developmental roadmap resulting in the most efficient use of finite capital resources and ensuring that resultant data is capable of addressing downstream commercial concerns.
Getting focused and efficient with strategy and its tactical execution has begun to reap dividends for portfolio companies in the form of follow-on capital. CID4 ABM has helped PeptiVir leverage an original $300K investment by acquiring an additional $450K derived from non-dilutive proof-of-concept and early-stage company grants. These grants are sourced from the Bioscience Discovery Evaluation Grant Program – a $56M program created in 2006 by the Colorado General Assembly and appropriated through the Governor’s Office of Economic Development and International Trade. A second example is the original $600K investment in Sophono funded the Company while it pursued other capital, resulting in an additional $850K being raised. Of this total, approximately $250K originated from the Qualifying Therapeutic Discovery Project Credit program and approximately $600K from angel investors.
It is a long and expensive journey for an early-stage company to get to an approved product and positive cash flow. The combination of developmental challenges and the difficult task of raising institutional risk capital have created the need for new or alternative financing approaches. The Active Business Management provided by CID4 has contributed to portfolio companies raising follow-on investments resulting in a leverage ratio of 1.5 to 1.0.
Stay tuned for the next installment of the ABM series as we highlight how CID4 continues to push the economic development envelope through innovation advancement.