The French biotech investment firm Jeito Capital has capped its first fund at an impressive €534M, just the latest example of the cash surge benefiting European life sciences investors this year.
This year is set to break records in terms of the money flowing into institutional life science investors. With 2021 not even finished, European biotech investor funds have bagged over €6.5B. This vastly outperforms the €4.5B total in 2020 — which was itself a record-breaking year for biotech investments.
According to Rafaèle Tordjman, Founder and CEO of the French firm Jeito Capital, this upwards trend is “one of the consequences of the Covid-19 crisis, which has raised awareness of the central role played by the biotech industry in solving the pandemic, and therefore the need to invest significantly in this capital-intensive industry.”
Earlier this month, Jeito closed its first fund at €534M, making it one of the biggest venture capital (VC) funds in Europe. The announcement follows other impressive European fundraisings in recent months, including a mammoth €2B private equity fund raised by GHO Capital Partners in July and a €476M fundraising from Abingworth in May. This week also saw a closing of the second fund from Advent France Biotechnology at €86M.
The uptick in funding for life sciences investors became particularly intense starting from March this year. That month, the US firm Orbimed bagged a neat €2.9B ($3.5B), which it allocated to three funds.
Within days of Orbimed’s announcement, the European venture capital heavyweight Sofinnova revealed what it dubbed Europe’s largest crossover fund dedicated to biopharma and medtech companies that aim to scale up operations.
“We’re seeing the entire sector shift and are able to access funds we never would have dreamed of accessing before,” said Antoine Papiernik, Sofinnova’s Managing Partner and Chairman.
“Healthcare and biotech – while once considered slightly risky investments in Europe – are now very much a priority for even the most conservative investors. Everyone wants to make sure they are in it and that has led to a strong increase in VC funding.”
The average size of these venture capital funds also seems to be increasing, and Sander Slootweg, the Managing Partner of Forbion, sees them gathering even more momentum forward.
“There is a trend of consolidation of the VC industry where the bigger funds get bigger and increase their offering to their investors and the smaller funds struggle to raise subsequent funds,” he explained. “This has to do with a critical mass of people and skills on the teams, market reach, and increased regulatory hurdles for VC funds.”
The bulk of funding for European life sciences investors is earmarked for companies developing disease treatments. Jeito’s fund, for instance, focuses on supporting biotech and biopharma companies in the fight against a range of health conditions, such as blindness and rare skeletal disorders.
“In most European life science firms, you will have different teams and funds, each dedicated to a specific stage of a company’s development,” said Tjordman.
“We aim to invest and re-invest significant capital to maintain ownership through a company’s growth to support the company to accelerate its therapies to commercialization.”
Nevertheless, biotechs revolutionizing agriculture stand to benefit from recent funds closed by Yield Lab in Ireland and Anterra Capital in the Netherlands. And big money pots raised by Sofinnova and the Swedish firm Segulah Medical Acceleration place emphasis on the thriving fields of medtech, diagnostics, and genomics.
One reason for the ballooning interest in European life sciences is that biopharma and medtech companies are maturing fast in this region. Additionally, many European firms such as the vaccine developers BioNTech and CureVac have gained huge publicity in the fight against the Covid-19 pandemic.
“Europe is now on par with the US in terms of technology,” said Papiernik. “When you think about the biotech companies that have played the most critical roles in confronting and beating this global healthcare crisis, you think both of BioNTech and Moderna.”
As the European biotech industry matures, there are gaps in the ability of the local investment ecosystem to support biotech companies. Sofinnova’s recent fund aims to overcome one of the biggest challenges: a shortage of European cash to help late-stage biotech companies expand. This is a role that has often been filled by investors outside of Europe.
“The gap has led European biotech companies to increasingly look to the US for their capital growth: almost 30% of private venture investments now originate from the US, and since 2012, almost one in three European biotechs filing for an IPO have done so directly on the Nasdaq,” Papiernik explained.
However, other investors see the need for more money at the early stages of the biotech life cycle. “We should not underestimate how critical the seed funding is,” said Alain Huriez, Chairman and Managing Partner at Advent France Biotechnology. “Early funding conducted by professional investors with previous operational experience is essential in building up a young, strong and healthy ecosystem.”
The European biotech ecosystem also has a big strength that is attracting investments to the continent: European companies often provide investors more bang for their buck than their US counterparts.
“Europe is seen as very attractive currently because good quality assets can be sourced 40% cheaper compared to equivalent US assets and the cost of running a biotech business in Europe is 50% lower compared to the US,” said Slootweg.
As we move further into 2021, it’s likely that the wave of funding fuelling European biotech investors is going to get bigger.
“I think this trend will continue: the market for therapeutic innovation is not a bubble, especially when we know that there are currently no effective treatments for approximately 75% of the diseases known today worldwide,” said Tjordman.
“I am therefore really optimistic about the future trends of VC fundraising in life sciences.”
This is an updated version of an article published on the 25th November 2020.
Cover image from Anastasiia Slynko.