Planet Innovation’s unique ‘strategic investor’ approach proves a winner

Planet Innovation is redefining what it means to be a strategic investor by providing investee companies with not just funding, but access to its people, facilities and networks.

The approach is underpinned by PI’s unique two-pillar model that combines strategic investments with a successful services business – giving PI both market insight and execution capability.

“As a strategic investor, PI is all about providing support rather than taking control,” said PI CEO Stuart Elliott.

“We’re happy to get down in the trenches and do what we can to help these companies succeed, while letting their management teams call the shots.”

The approach is working so far.

Over its lifetime, PI and its investee companies have raised over A$200 million in external capital. PI has invested more than A$60 million of its own capital directly into its own ventures and partners.

Key among the strategic investments is point-of-care diagnostics company Lumos Diagnostics, which recently listed on the Australian Securities Exchange (ASX) at a market capitalization of A$187.7 million.

Another investee company, ophthalmic therapies biotech Visus Therapeutics has just closed a US$20 million Series A2 fundraising, which was led by LSP, a European Tier 1 life sciences investor; Sage Partners, a dedicated life sciences fund from Hong Kong; and Planet Innovation, alongside other existing investors. Visus plans to commence Phase 3 clinical trials later in Q3/Q4, 2021.

Early-stage digital health company Atmo Biosciences, which is underpinned by an ingestible gas-sensing capsule that provides real-time insights into gut health and microbiome function, is also undertaking multiple clinical trials, with early results looking positive. The company is currently finalizing a capital raise.

All of these companies have deep links with Planet Innovation. PI provided not only capital, but access to staff, facilities and a broad investor network to help get the businesses started. Lumos Diagnostics’ CTO, Sacha Dopheide, was a founding staff member at Planet Innovation, while Visus Therapeutics’ CEO Ben Bergo and Atmo Biosciences’ CEO Mal Hebblewhite both worked as executives at PI before taking the helm at the investee companies. Lumos and Atmo both have Australian teams with the ability to draw on PI’s design and manufacturing capabilities as needed.

But at a corporate level, PI is very hands off.

“All of these companies have put in place very strong management teams at both an executive and board level. We know they can deliver, so we want to let them get on and do that, while helping out wherever we can,” Stuart said.

“This approach is very different to that taken by traditional venture capital and private equity firms, which often want a seat at the table and come with a list of demands for preferential treatment which often conflict with the interests of other shareholders.”

PI’s two-pillar strategy of services and business investments

The success of PI’s approach is rooted in its unique two-pillar model that combines services and strategic investments to build long-term, high-value relationships with global healthtech companies.

On one side, there is a strong services business offering product development, commercial services, digital services and manufacturing. This is a mature, stable business that delivers both strong financial returns and market insights into the healthcare and life sciences industries.

On the other side is the investment portfolio, comprising several businesses incubated at PI, as well as strategic investments into clients and partners.

“We often get asked what is the secret to our success, and it really comes down to our unique model,” Stuart said.

“There are many services businesses, but they are not always strategically aligned with their clients. And there are investment organizations, but they rarely have the level of insight into the market or the investment opportunities that they would like, nor do they have the genuine execution skills to support their investments. PI has both.

“We have a practical understanding of healthcare market opportunities which enable us to make smart, strategic investments. We also have the execution capability to support these investments, which leads to accelerated commercial outcomes.”

While PI has had largely the same strategy since its foundation, Stuart credited the new members of the PI board with bringing the experience needed to guide the business through this time of growth.

“PI has done a lot of work over the past couple of years to strengthen our board with the addition of key people like Chair Jonathan Ling and non-executive directors Sue MacLeman, Hany Massarany, Jim Fox and Euan Pizzey. The combined breadth and depth of their knowledge and experience is invaluable,” Stuart said.

Jonathan Ling, an experienced CEO of successful manufacturing businesses who joined PI as Chair in March 2020, said it was an honor to be able to guide PI during a period of such growth.

“This is a really exciting time at PI. Our services business is having its best year ever and our investment portfolio is also performing strongly. Lumos’s IPO is just the start – the future is looking very positive for our other investee companies and for PI itself,” Jonathan said.

Loyal investors key to success

Planet Innovation’s model offers a solution to the long-standing problem of how to get strategic, sophisticated investors to take a chance on early-stage companies.

PI has a group of high net worth (HNW) and institutional investors, including SG Hiscock (SGH) and Accordius, that have continued to invest in PI through multiple capital raisings since 2015 and, in several cases, are now supporting investee companies.

“We’re very grateful for the support of these early-stage investors. They’ve been both patient and supportive, realizing that success does not happen overnight. It’s this sort of investor that we need more of if we’re going to see companies like PI grow,” Stuart said.

“It’s really pleasing to see these investors not only continuing to support PI, but also to be investing in our investee companies like Lumos. It can be very difficult for early-stage companies to raise capital, particularly in Australia, so it’s great to see the network effect of PI is working.”

SG Hiscock is a long-term PI investor. Rory Hunter, Portfolio Manager for the SGH Medical Technology Fund, said: “SGH have been delighted with our investment in PI. They are now Australia’s leading medical technology commercialization company, recognized globally. Since we first invested six years ago, PI has gone from strength to strength – expanding their services business and also building an impressive ventures company and portfolio of healthcare investments.”

SG Hiscock has also invested in Lumos Diagnostics through its new medical technology fund.

“The acceleration of Lumos’s services business over the past year has been eye catching. It is our view that the trend towards point-of-care diagnostic testing is in its infancy, and, as such, Lumos’s business resides at the beginning of a long-term growth wave. As a result, Lumos is, and will remain, a key investment within our SGH Medical Technology Fund. The team at SGH are excited by the potentially significant upside that FebriDx brings to the equation.”

Learn more about investing with PI on our Investors page.