DUBLIN – French biotech has a new source of cash for early stage ventures. Advent France Biotechnology (AFB) has raised €64.75 million (US$69.7 million) in a first closing of a new seed fund, which has a mandate to back first or best-in-class breakthrough innovations that address unmet medical needs.

The original plan was to build a portfolio of 15 firms, but the Paris-based fund may have to revise that figure because the response from investors exceeded its original expectations. "The initial target was €60 million, which we've exceeded at the first close," chairman and managing partner Alain Huriez told BioWorld Today. It has not set a final target, but it could reach €70 million in the coming months. "We're just keeping some ongoing contacts with potential limited partners who expressed some interest," he said.

In addition to therapeutics, it will also invest in med tech, diagnostics and digital health. It has been evaluating projects in parallel with its fundraising activities. "We have three to four projects in active due diligence, and we expect to invest in two or three projects before the end of the year," he said.

The new Advent is borrowing the investment playbook of London-based Advent Life Sciences (ALS), a veteran of European and U.S. life sciences investing, which has raised $393 million across two funds over the last five years. It will have informal access to the latter firm's 15 investment professionals, who will add ballast to its four-strong team, led by Huriez and managing partner Matthieu Coutet.

Huriez, who at various times has been a medical practitioner, executive, entrepreneur and venture capital investor, has been working with ALS over the past five years and will continue to work on consultancy basis for the U.K. firm. It tends to operate at a larger scale than its French counterpart. "There will be cross-fertilization and synergy in terms of due diligence," he said. The relationship is informal – ALS is not a participant in the new fund.

The latter's backers include France's National Seed Fund initiative (Fonds National d'Amorçage), whose participation is managed through Bpifrance, the state-owned public investment bank, EU Innovfin Finance for Innovators, a joint initiative between the European Investment Bank and the European Investment Fund, and the European Fund for Strategic Investments. Two corporate venture capital funds and a number of family offices are also participating.

Huriez said the fund will invest €3 million to €8 million in companies, although it plans to syndicate larger deals involving high-potential prospects. It also aims to act in some instances as a company founder, by building companies around promising science emanating from France's fabled life sciences research institutes. Long one of Europe's leaders in biological research, the country's performance in the lab has not been replicated in the marketplace.

"We have a problem of undercapitalization," Huriez said. A prominent feature of its financing culture is the large number of small-scale transactions, leading to a highly fragmented sector.

French biotech firms have raised $203.45 million so far during 2017, a performance that puts it roughly on par with that of 2016, when the sector raised $659 million over the full year. (See table, below.)

Last year was a quiet one for French IPOs. Just two firms, Gensight Biologics SA and Pharnext SA, went public, raising about $78 million in aggregate. The class of 2017 has almost hit that mark already. Within one week in February, Lysogene SA and Inventiva SA raised $75 million between them.

Secondary offerings are sparse this year, and the total raised so far, $102 million, is a little behind 2016, when 13 transactions yielded $460 million in aggregate. So, too, is private equity: Five transactions yielded $26.45 million in total, whereas the total for 2016 was $121 million from 13 deals.

Transaction sizes in France tend to lag those of more mature markets, such as the U.K. or Germany. The advent of a focused and dedicated seed fund might make life a little easier for some of the brighter prospects emerging from French research labs. But raising large-scale private equity will remain challenging for most of them.