AFR Coverage of US$6M GHIF Investment in Atomo
AFR Article on GHIF Funding Jan 14 2016
An investment fund backed by billionaire Bill Gates is pouring $6 million into a Sydney HIV and malaria testing company.
The US based Global Health Investment Fund (GHIF), which was set up by the Bill and Melinda Gates Foundation and investment bank JPMorgan in 2013, will hand Sydney based Atomo Diagnostics fresh funds as it seeks to scale up production of its self testing devices, expand its sales activities and the commercial rollout of its products in developing countries.
Atomo makes a palm-sized device that makes it possible for people to test for HIV in their own home, and has already been exporting devices to South Africa.
The diagnostic testing industry shot to prominence in the investment world for all the wrong reasons last year. Theranos, a Silicon Valley startup valued at $US9 billion, which claims to have the technology to carry out comprehensive testing for hundreds of conditions using a few drops of blood from a finger prick, much more cheaply than existing methods, was accused of “struggling” with its blood tests, and actually testing people using traditional machines.
Yet Mr Kelly said the increased scrutiny surrounding Theranos could actually benefit his company. “It has put a commercial value on companies that have disruptive diagnostics,” he said. “Although they have failed to execute, they [Theranos] have opened up that opportunity in the eyes of investors, and that’s what we hope to capitalise on.”
The investment will be structured as a loan with warrants attached to it, he said. Atomo, which was established five years ago, also secured a $1.8 million grant from the NSW Government last year. It will now attempt to raise an additional $6 million in equity from investors, which could include GHIF.
There has been widespread criticism from domestic startups about the lack of support they get from local investors. Mr Kelly said Atomo was looking offshore for further funds.
“If you want to get a couple of hundred grand there are a lot of angels [in Australia], but if you are looking for $2 million to $3 million, the amount of options tapers off fairly dramatically. And that has forced us to look overseas”.
Atomo is currently backed by its founders and a group of high net worth investors, including property magnate Lang Walker. A spokesperson for Mr Walker confirmed he is a shareholder and “active supporter” of the company. GHIF has already provided financial backing for one Australian organisation – Melbourne based biopharma non-profit Medicines Development.
Curt LaBelle, a fund manager at GHIF, said in an emailed statement that the organisation was “thrilled” to support Atomo.
“We believe that the company’s unique and innovative rapid test solutions support point-of-care testing across a variety of settings and have many exciting applications in both developing world and developed markets.”
by John McDuling