A great first exit for the fund

 

In August 2013 the Angel CoFund secured the first profitable exit for the fund and its co-investors. The sale of Non-Linear Dynamics Limited to its key customer, Waters Corporation (NYSE:WAT), provided a good return for both debt and equity of the investors in the round, just a little over 12 months after investment.


In 2012 the Angel CoFund was approached by a syndicate of experienced business angels to invest in a company which they were looking at for the first time, Nonlinear Dynamics Group, a leading life sciences software company based in Newcastle.


The business was a group made up of three distinct companies: Nonlinear Dynamics Limited develops proteomics and metabolomics software which can aid the discovery of new drugs and diagnostics; Biosignatures is engaged in molecular diagnostics using proteomic technologies; and TotalLab is developing software for electrophoresis analysis.


Whilst the syndicate didn’t come to the company with specific life-sciences expertise, they were fully aware of the challenges and opportunities presented by the sector so undertook a rigorous approach to due diligence, as well as providing strong leadership of the investor group. This hands-on approach gave considerable confidence to the CoFund team and Investment Committee and led to a quick decision to co-invest.


The Angel CoFund co-invested via a mix of mezzanine debt and equity, on a pari passu basis with the angel syndicate, and with further mezzanine debt funding coming from FW Capital. The syndicate lead investor took on a non-executive position, strengthening the board and bringing specific finance and business skills.


Finance from the Angel CoFund allowed the funding round to complete, providing investment to all three businesses in the group with a specific focus on building lab capability, continued product development and strengthening the sales and marketing team. Critically it also helped the company move forward rollout plans with Waters Inc., paving the way for the offer to purchase the Non-Linear Dynamics in Q2 2013


“This was a great exit for our investor group and a great deal for the founders. We found working with the CoFund very straightforward and they ensured we could close the round at the right level. In addition to generating excellent financial returns for the investor group the investment package enabled Nonlinear to fund its development work in some highly important areas within clinical research.”  Robin Womersley, Angel Investor, Non-Linear Group.


Following the sale of Non-Linear Dynamics the CoFund retains significant equity stakes in Biosignatures and TotalLab and continues to support both businesses.