BioWorld International Correspondent
LONDON - Two European venture capital firms announced the closing of new funds, raising €785 million (US$1.03 billion) in total for investment in early stage companies.
The UK/U.S. firm SV Life Sciences closed its Fund IV at €435 million (US$572 million) while Index Ventures, based in London and Geneva, Switzerland, raised €350 million for its Fund IV. Both said the funds were oversubscribed.
These announcements follow the closing in January of Europe's largest life sciences venture fund to date, the £300 million (US$589.4 million) Abingworth Bioventures V. Several other significant funds have kicked off in Europe this year including Creandum, a Nordic fund worth $107 million, Wellington Partners', of Munich, Germany, first closing at €50 million of an expected €150 million fund; Neuhaus Partners', of Hamburg, Germany, €70 million first closing of a proposed €100 million fund, and Forbion Capital Partners, the former life sciences investment arm of the Dutch bank ABN Amro, spinning out as an independent firm with €200 million to invest.
"There is more money that sees life sciences venture capital as attractive," Kate Bingham, managing partner at SV Life Sciences, told BioWorld International. "Twelve years ago when we raised our first fund, a lot of people said, 'You're doing what?' Now it is an accepted asset class."
SV Life Sciences is also on something of a roll, having sold $2 billion worth of companies in the past year, including PowderMed, GlycoFi, KuDos Pharmaceuticals and Solexa.
SVLS IV brings the firm's total funds advised or managed to $1.6 billion, making it one of the largest venture capital investment groups dedicated to the life sciences sector. The new fund will be focused on providing start-up, early stage and expansion capital to private life sciences companies in the U.S. and Europe, investing across biotechnology and pharmaceuticals, medical devices, health care services and health care information technology. Investment size typically will be between $5 million and $25 million.
The bulk of the fund's investments will be in the U.S. "There are better stock markets and more liquidity. The U.S. is by far the most mature market," Bingham said. "In Europe, there are innovative ideas, but there is a much thinner pool of people [to run companies], and the stock markets are weak."
SV investors are split between 40 percent in Europe and the rest of the world; and 60 percent in the U.S. The firm took the opportunity of being oversubscribed to widen its investor base. "We went for more foundations and endowments, because they tend to take a longer term view," said Bingham.
Similarly, Francesco De Rubertis, general partner at Index Ventures, said Index could have sold its new fund several times over to investors in previous funds, but decided to broaden the investor base, taking in a small group of new U.S. investors. In total, there were $1.5 billion to $2 billion worth of requests to join the fund.
The Index fund will make early stage investments in life sciences and information technology companies in the U.S. and Europe. Historically, Index has put two-thirds of its funds into IT and one third into life sciences, and it expects to do the same with this fund. "More than anything it's a reflection of the deal flow," De Rubertis told BioWorld International. "Life sciences deals absorb more money and take longer to mature."
Over the next two to three years, the new fund will invest in 10 to 12 life sciences companies. "The starting point will be European-based business plans, but they have to grow globally; they can't be regional players."
Of late, European capital markets have seen the first major wave of success in biotech as companies created in the mid-1990s, such as Actelion, Genmab and Crucell, have matured. "These investments are paying back now and generating more receptiveness in the capital markets in Denmark, Switzerland and Benelux," De Rubertis said.