Growth? We can show talented scientists how to do that, says Frontier IP

There are 18 scale-ups in Frontier IP’s £33 million portfolio, at different stages of maturity. They are put in clusters based on underlying technologies and the industrial processes needed to help them grow. Often, similar processes can be applied across different industries: understanding how to handle powders is as relevant to a food ingredients company as it is to a tile manufacturer.

There are six clusters: artificial intelligence; innovative materials; enabling health; food and agritech; energy; and water. Portfolio companies can sit in more than one grouping. Fieldwork Robotics, for example, is in the food and agritech cluster, because its robots harvest soft fruit, and in the AI group, because of the extensive machine-learning required to identify a perfectly ripe raspberry.

The Oxford-educated Crabb, 57, who also co-founded the venture capital company Sigma Capital Group, said: “The first thing we are looking for is technology which is globally applicable and fits within the clusters we understand, and where we have knowledge and expertise. We are also looking for technologies which are cost effective and can be made at scale.”

Academics may be very good at making one of something, or making things in small batches, he says, but “industry wants things you can make at scale because it is much more efficient, particularly if you can use existing manufacturing processes”.

He added: “The other thing we think about is the supply chain for delivering the product. If you’ve got a new product, then you should understand everything the end-customer needs because it feeds into who you partner with.”

Putting the right people and management teams in place is crucial. “Academics are interested in the technologies, but in most cases they do not have experience of building businesses so you need to build a management team.

“The problem is that in order to get the best management team, you need to know exactly where the product fits in the market, so you can recruit the right people.”

This approach was applied at Pulsiv, a portfolio company that is developing extremely efficient power conversion technology. Mass market technologies typically convert only 50 per cent of the energy they consume; Pulsiv converts 90 per cent or more. The company has launched its first product, a reference design for the world’s most energy-efficient 64W USB C charger.

Frontier IP got the firm’s technology to a point where Pulsiv was able to recruit the former Arm senior executive Darrel Kingham as chief executive, and the former SharkNinja chief technology officer Tim Moore as chief product officer.

“This is the work we as Frontier IP do, validating the technology, developing the industry partnerships and understanding the market, and then helping to bring in the right management teams to make the company a success,” Crabb said.

Function and cost are primary considerations in selecting a candidate company, ahead of being “green”.

Crabb said: “We are looking for technologies that meet a significant global need and are cost effective, so being green is third on the list behind function and cost. The flipside is that technologies that are more efficient are generally greener anyway.”

Frontier IP takes stakes in the firms that it develops and holds them for a long time, sometimes for a decade or more. There are two main routes for potential exits: an IPO or a trade sale.

Its biggest success so far has been Exscientia, which is developing AI-driven drug discovery. Frontier IP was a co-founder when Exscientia was incorporated in 2012. It was quoted on the Nasdaq Global Select Market in October 2021 with a valuation of $2.9 billion. In total, Frontier IP raised £14 million from the sale of Exscientia shares; their original cost had been less than £2,000.

Promising companies in the portfolio include Cambridge Raman Imaging, whose high-speed lasers and advanced artificial intelligence create and analyse detailed digital images in near real-time. Initial applications are in medicine for diagnosing and monitoring tumours and other diseases in human cells.

Frontier IP itself has had a tough year financially as credit conditions tighten, with a £1.3 million loss for 2024. Despite that, it has shown faith in Cambridge Raman Imaging by taking a 26.8 per cent stake and putting in a loan facility to support growth after the commercial launch.

In its annual report, Frontier says that “when times are hard, the principles on which we base our differentiated and innovative business model come to the fore”, namely quality over quantity.

How one of Frontier’s picks scaled up

Alusid creates premium-quality tiles, tabletops and other surfaces from sustainable materials based on recycled industrial waste. They have a significantly lower carbon footprint than equivalent tiles.

The company, in which Frontier IP has a 35 per cent stake, has successfully scaled up its recipes and processes.

Its floor and wall tiles are mass manufactured by subcontractors on industry-standard manufacturing equipment. Customers include Topps Tiles and the company is exploring international distribution, initially in Europe.

Its chief executive Dr Alasdair Bremner, a former academic at the University of Central Lancashire, said: “Frontier IP’s support has been invaluable; right from the start they helped us with the challenging transition from academia to business. They helped us to raise finance and secure partnerships with major companies like Topps Tiles.

“They have been instrumental in helping us commercialise and scale up our technology internationally, while keeping overheads low. They have also helped us with structuring deals, refining pitches, targeting the right markets and crafting a strong business plan.

“They have also been a great partner when challenges arise, or timelines slip, and we are proud to be a part of their innovative materials cluster.”

The company raised £1.13 million through a funding round backed by Octopus Investments and is exploring options for an IPO, meaning it is likely to be the next in Frontier IP’s portfolio to exit.

Alusid has just signed its first international distribution agreement with Front Materials, the Dutch sustainable building pioneer.

Front will have exclusive rights to distribute Alusid’s wall and floor tile ranges in the Netherlands. The Dutch firm will also be able to distribute to the rest of Europe and the United States on a non-exclusive basis.

Bremner said: “This agreement marks an exciting milestone in our international growth strategy.”