Bringing Silicon Valley to the Manawatu

You can take an entrepreneur out of Silicon Valley, but you can’t take the entrepreneur out of the person. Well that’s true, at least, for Tracy Thompson, chief executive of Palmerston North startup Polybatics.

Thompson first came to New Zealand in the 1990s, setting up a global medical device distribution business. He settled here permanently two years ago, deciding he needed a change. “New Zealand just looked like a good option.”

With seven Silicon Valley medical diagnostic startups under his belt, the former senior executive from US multinational Agilent Technologies didn’t stay long with New Zealand Crop & Food, opting instead to wrestle some technology away from Massey University’s microbiology labs. “It’s difficult for a leopard to change his spots. When I came here, I just started looking at various technologies that might have some potential.”

Thompson heard about Polybatics when he first arrived in New Zealand, but it was only towards the end of 2008 he enquired and discovered the technology was looking for a way out. “There was another party interested, but their vision was to license the technology and not actually build a business. My vision was to create a high value manufacturing operation here in the Manawatu and that held a little more interest for Massey.”

Polybatics was officially registered in January 2009. Thompson says he was attracted by the platform technology, developed over many years by former German scientist, now Massey Professor of Microbiology Bernd Rehm. Rehm is Polybatics chief science officer and the third largest shareholder of the company after Massey University and Thompson.

In a nutshell Polybatics designs bionanoparticles with functional proteins attached that can be manufactured cheaply and on a large enough scale to be useful for medical and industrial applications. The company’s first goal is to tap the rapidly growing US$40 billion therapeutic antibody market. Using Polybatics’ biobeads the costs of purifying therapeutic antibodies can be reduced 100-fold, says Thompson. There are also positive signs the technology can be used to quickly produce safe vaccines, mimicking viruses but without the harmful DNA. Plus Thompson is in talks with global healthcare company Procter & Gamble about how Polybatics’ technology can significantly reduce the cost of producing their enzyme-rich washing powders.

Though the future looks rosy, the company’s still in startup mode, looking to scale up production to prove its technology in the therapeutic antibody market. One hurdle the company has had to overcome is getting the university to believe in what Polybatics can do, says Thompson. “It’s taken us a long time to get all the pieces in place. The university didn’t want to invest in any equipment until we had money in the bank and signed the research contracts, but at that point my investors were wondering what we were doing with the money they gave us.”

Polybatics raised $1 million earlier this year — with the help of Manawatu incubator the Bio Commerce Centre — from the Manawatu Investor Group (MIG), Warehouse founder Stephen Tindall’s K1W1 fund and the government-backed New Zealand Venture Investment Fund. Though Thompson had originally sought $2.5 million, $1 million gives the company enough cash for 14 months and allowed it to sign research contracts, so the university could invest in a suite of bioreactors and Polybatics could finally scale up what it’s doing.

Dean Tilyard, head of the Bio Commerce Centre and MIG says investors were attracted by both Thompson and Rehm’s track records and the platform technology’s broad scope. As to the reduced investment, MIG expects to make further investments, once Polybatics has developed further, he says.

Thompson laughs when asked if setting up a startup here differs to setting one up in Silicon Valley. “Very much,” he says. For one thing the $2.5 million he originally asked for would have looked like a very small amount in the US, but here it was a lot for investors. Also a US biotech investor wouldn’t expect any revenues for at least three to five years, but New Zealand investors expect revenues in the first 12 months, he says.

“When you’re working for a startup it’s more important to act first and think about it later. This is why it’s not for some people, because they need to analyse all the possibilities before they act.” Thompson says he employs a method common in Silicon Valley called ‘discovery driven planning’ where you set out where you think you want to go, take a few steps, test the theory and then take a few more. “If you sit back and wait for all the analysis to get done, the world has shifted such that you’ll never hit your target because it has already moved. This way you’re moving forward, but constantly re-evaluating where you think you want to go.”