HAMBURG, Germany - The German-U.S. venture capital firm TVM Techno Venture Management last week reported the second and final closing of its new TVM IV fund at EUR300 million (US$269 million), doubling the original target size of the fund. TVM already has made six investments out of the new fund since its first closing in January.
Dr. Helmut Sch|hsler, managing partner who is responsible for life science investments of the new fund, told BioWorld International TVM would use the money mostly for seed and start-up financing. "We will do late-stage and pre-IPO financing of already existing investments through the fund. However, in these late-stage companies we prefer to serve as a co-investor. We will team up with other TVM funds or outside investors."
At the front end, the strategy of TVM had changed. "We view start-ups as a nucleus, and prefer an aggressive growth followed by acquisitions, so that the new companies serve as consolidators. Already there is a wave of in-licensing deals and company acquisitions." Sch|hsler said that five years ago start-ups had been founded with DM5 million (US$2.3 million) to DM7 million and had been given time to develop. "Nowadays we prefer to start with up to DM20 million, find a top management team and start transactions very early."
The fund will invest mainly in the U.S. and German markets, but there will be some investments in the UK as well, he said. "For the first time in seven years, we [recently] co-invested in the UK."
Sch|hsler added that biotechnology was a very special market and only a small group of expert investors consistently follows it. "So these dedicated funds are becoming bigger and bigger while other players have moved out."
He said that biotech right now has excellent visibility in Germany and in the U.S. "We have witnessed an unprecedented rally in biotech on Nasdaq, followed by a strong correction, and in general, extreme volatility in the U.S. market. Europe, especially the Neuer Markt and the biotech companies listed there, have held up surprisingly well in recent weeks. This gives us additional confidence in the European markets."
The fund was doubled following high demand from both existing and new investors. Among them are Private Equity Holding (Bank Vontobel), tbg (Technologie-Beteiligungs-Gesellschaft der Deutschen Ausgleichsbank), Alpinvest, Siemens Venture Capital, Kredietbank Luxembourg, Versicherungskasse der Stadt Z|rich, Helvetia Patria Versicherungen, the government of Singapore, Minnesota Life Insurance Company, Dresdner Kleinwort Benson, BT Investment Partners (Deutsche Bank), BHF-Bank, Industriekreditbank, ERC Frankona/GE Capital and the University of Pittsburgh Medical Center.