Investing in smaller companies, particularly in their formative years, inherently carries significant risk. However the recent sale of stakes in DxS by two VCT managers, NVM Private Equity and YFM amply demonstrates the potential rewards.
Investors in the Northern VCT, Northern 2 VCT and Northern 3 VCT as well as the YFM run British Smaller Technology Companies VCT 2 will benefit from the sale. Holders of the latter will receive a special dividend of 2p per share at the end of October, meanwhile the Northern VCTs will incorporate the proceeds in their usual half yearly dividends.
DxS is a healthcare company specialising in providing molecular diagnostics to aid doctors and drug companies indentify safe and effective therapies for patients based on their molecular profiles. The venture capitalists built positions in the company in 2001, 2004 and 2006 having identified personalised medicine as an exciting growth market. The funding allowed DsX to bring its diagnostic kit to market and expand rapidly, winning contracts to develop kits for a number of multinational pharmaceutical companies.
The deal to sell DxS to Qiagen, a pharmaceutical technology company, is worth up to $130 million and stands to secure spectacular returns for the VCTs involved of over ten times their initial stakes. Of course not all investments go this well and some early stage companies don’t make it all. The secret to successful venture capital investing is making the right deals and to have more winners than losers.
Rob Morgan, Analyst
Investors in the Northern VCT, Northern 2 VCT and Northern 3 VCT as well as the YFM run British Smaller Technology Companies VCT 2 will benefit from the sale. Holders of the latter will receive a special dividend of 2p per share at the end of October, meanwhile the Northern VCTs will incorporate the proceeds in their usual half yearly dividends.
DxS is a healthcare company specialising in providing molecular diagnostics to aid doctors and drug companies indentify safe and effective therapies for patients based on their molecular profiles. The venture capitalists built positions in the company in 2001, 2004 and 2006 having identified personalised medicine as an exciting growth market. The funding allowed DsX to bring its diagnostic kit to market and expand rapidly, winning contracts to develop kits for a number of multinational pharmaceutical companies.
The deal to sell DxS to Qiagen, a pharmaceutical technology company, is worth up to $130 million and stands to secure spectacular returns for the VCTs involved of over ten times their initial stakes. Of course not all investments go this well and some early stage companies don’t make it all. The secret to successful venture capital investing is making the right deals and to have more winners than losers.
Rob Morgan, Analyst
