Multi-million dollar life sciences initiative in UK welcomed by venture capitalists
Biotech venture capital firms across Europe have warmly received the launch of a € 235m (£ 200m) UK government initiative to support the growth of promising life sciences companies.
UK Life Sciences Investment Program open for applications from fund managers this month, with the aim of providing € 235m of late-stage capital and attracting at least € 469m (£ 400m) more in private investment .
The scheme aims to compensate for the scarcity of science-based venture capital (VC) and other funds in the UK that support early stage companies, broadly defined as those raising Series B and above.
Funding will be provided by British Patient Capital (BPC) – the commercial arm of the government-owned British Business Bank that invests in venture capital and growth. The bank intends to contribute between € 59 million(£ 50M) and € 117M(£ 100m) to funds with a minimum target size of € 293m(£ 250million), providing up to 33% of the total engagement alongside private investors.
In addition, the Life Sciences Investment Program plans to channel investments from the UAE sovereign wealth fund Mubadala Investment Company, which has committed an initial amount of € 937m (£ 800m) in the UK life sciences sector. in March of this year.
Tim Haines, chairman of venture capital firm Abingworth – a former beneficiary of BPC – said the move was great news for the UK life sciences industry, bringing more capital and putting it in the hands of ‘experienced investors.
“They particularly target opportunities at a later stage where there is sometimes a shortage of ‘scale-up’ capital, so as part of a plan to generate a number of UK based businesses. among the best in the world, that makes a lot of senseHaines said.
“More broadly, this is a 10-year strategy that aims to build on the UK’s leading global biotechnology and life sciences sector by leveraging UK genomics and research capabilities. of data.“
He added: “The vision also seeks to mimic the success of the UK’s extraordinary response to the Covid-19 pandemic in vaccine development, manufacturing, therapies and diagnostics. “
The initiative could be particularly vital in the post-Brexit landscape, said Antoine Papiernik, managing partner of Paris-based venture capital firm Sofinnova Partners. Currently, the UK is the largest life sciences hub in Europe, with just over a third of all companies in the sector.
“While BPC has already been active for several years, this program comes at the right time to boost the biotechnology financing ecosystem, particularly at the last stages of the financing value chain,” he told me.
UK businesses can no longer easily access EU loans in forms such as the European Investment Fund (EIF). The FEI pumped out an impressive 12.9 billion euros in European companies last year, up 26% from 2019’s total. Earlier this year, the EIF also announced its participation in V-Bio Ventures’ € 78 million V-Bio Fund 2, based in Belgium, and invested 30 million euros in the 140 million euros BGV IV of BioGeneration Ventures, based in the Netherlands.
“This program will help close this gap,”Papiernik said.“It will also encourage non-UK-based funds to do more in the UK, which can only be a good thing for the entire European biotech ecosystem.“
Papiernik said his company would be likely to apply and stressed that its London office already includes senior partners from the Sofinnova Crossover fund, which is investing in opportunities at a later stage.
“Obtaining the support of BPC as an investor in the Sofinnova Crossover Fund would certainly expand our strategy in the UK,“he noted.
UK government support largely mirrors what is available elsewhere in Europe, where biotech venture capital firms and other investors are seeing increased fundraising.
In France, a report by economist Philippe Tibi found that French technology companies fight against a lack of money to help them grow. The findings sparked a initiative This has led institutional investors to commit to investing € 6 billion in technology companies by the end of 2022.
“In the Tibi Initiative, the French government strongly encouraged local institutions, insurance companies and large mutual funds to invest more of their assets in late stage growth funds from all sectors. , including life science specialists like Sofinnova Partners,Said Papiernik, whose Crossover Fund qualified for the initiative.
He added that German public investment and development bank KFW has been very active in investing in funds, including non-German ones, to encourage their investments in Germany.
“So, we can see that this type of initiative actually works to stimulate investment in venture capital funds dedicated to life sciences, and therefore increase investment in underlying biotech companies.“