How a New Fund Could Help University Startups Grow

Not long ago, Nabanita Nawar (BSc 2017 UTM, PhD 2022) and Pimyupa Manaswiyoungkul (PhD 2021), the Mississauga-based founders of HDAX Therapeutics, faced a classic entrepreneurs’ dilemma. The two young scientists had developed a novel approach for targeting rogue proteins implicated in heart and kidney conditions. In 2021, they decided to take a huge career step, leaving academia to set up their own firm to commercialize the discovery.

Fairly quickly, they hit a formidable roadblock. Having exhausted their initial funding, including support from UTEST, U of T’s early-stage incubator, they needed more capital to move their prospective therapy to the next level. But they couldn’t find anyone in Canada willing to back them. “There just aren’t enough investors in Canada who have the risk appetite for that early-stage technology,” says Nawar, the company’s CEO. So they headed south – to San Francisco, New York and Boston – in search of investors with expertise in drug development and medical devices. They eventually secured seed financing from a combination of U.S. and Canadian sources.

Many young life-science startups face the same difficult search for early backing. To address this problem, U of T has partnered with Genesys Capital, a Canadian venture capital firm, and McMaster University to launch the Genesys University Seed Fund.

The fund will provide initial investments of up to $1 million in promising life-science startups emerging from U of T, McMaster and elsewhere in Ontario, with the possibility of further funding as the companies progress. So far, the fund has secured commitments of more than $30 million – toward a goal of $40 million – from investors including the Temerty Group, Venture Ontario and RBC, as well as U of T and McMaster. Similar funds have been established by MIT and the University of California, Berkeley.

Leah Cowen, U of T’s vice-president, research and innovation, and strategic initiatives, says the creation of the fund represents a new approach within the university’s well-established entrepreneurship ecosystem. “This is a milestone,” she says. “The university has never done this.”

The launch also reflects one of President Melanie Woodin’s core commitments: mobilizing knowledge for social and economic impact. “By shortening the path from research discovery to real-world application, commercialization and venture creation,” she says, “we can strengthen Canada’s innovation ecosystem and build a more resilient economy.”

The Ontario government is supporting the fund through Venture Ontario as part of a broader effort to strengthen the province’s life-sciences sector, including by attracting and retaining talent. Steve Romanyshyn, the agency’s president and CEO, says the fund could help draw further investment by signalling that Ontario is a strong destination for life- science innovation.

Founded 25 years ago, Genesys Capital, one of Canada’s leading venture capital partnerships, has raised more than $400 million through six funds and backed 44 companies. Genesys usually invests in businesses that are further along in developing their technologies and are seeking larger amounts of capital to grow, says Jamie Stiff, one of the company’s managing directors.

But Stiff says Genesys also regularly hears from very young companies like HDAX. “We’re introduced to all sorts of opportunities through the University of Toronto, through McMaster, through other universities, where we say to ourselves, ‘Gosh, if we could only invest half a million to a million dollars into this program to advance the science and run some critical experiments.’”