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Key Venture Capitalists Active in the Life Sciences Sector

During the Covid-19 pandemic, the life sciences and biotech sectors enjoyed a boom in investment from venture capital firms all over the world. Their attention wasn’t focused so much on the vaccine programmes, which really only involved a handful of very large companies. What they were more interested in was other forms of innovation for which the unprecedented global crisis had created an urgent need. These included the pursuit of further developments in artificial intelligence, mental health treatments, cancer diagnosis and other diagnostic services, even digital GP visits.

Now that the threat from Covid-19 has largely subsided to a more manageable level, the good news is that there is no sign of the venture capital drying up. The picture is positive across the world, with more than $120 billion of funds pouring into the sector in the USA in 2021, while early stage European biotech companies are enjoying a resurgence in interest. The UK remains dominant in Europe, not least because of the government’s £200 million initiative to support the growth of late-stage life sciences companies. In 2018, annual investment in UK biotech grew by 85% from its 2017 level to reach £2.2 billion. By 2021 it had risen to £4.5 billion, and the trend is decidedly upwards.

There are over 30 major venture capital firms active in the UK, some of them focused on investing in established businesses, while others are prepared to put their funding into a startup or scaleup.

Advent Life Sciences concentrates on biotechnology, new drug discovery, med tech and therapeutics. It is one of Europe’s leading investors in mid-stage companies, but it is something of an exception in its decision not to get involved in seed funding. There are many firms who take a different view.

Alderley Park Ventures, for example, is a £5 million seed investment fund which is managed by BioCity and has benefited from a significant contribution from AstraZeneca. Another firm, which specialises in pharmaceuticals, digital health and social care, is Apposite Capital. It has been active in the market since 2006 and generally makes initial investments of around £5 million, sometimes extending as high as £20 million over the life of each investment. Among the businesses it has supported are Ambit Biosciences, Convergence Pharmaceuticals and Ulthera. All three have since been acquired by much larger concerns, guaranteeing their futures.

Slightly smaller in scale and committed exclusively to seed funding is Crescent Capital, which has been investing since 1994. Based in Belfast, its areas of activity are information technology, manufacturing and the life sciences generally. Their initial investments are between £450,000 and £1.2 million, with total funding over all rounds reaching about £3 million. Their policy as seed funders is to exit any investment within five to seven years.

Another firm which has a long history of venture capital funding that dates back to the 1990s is MVM Life Science Partners. Their investment policy covers rounds from seed to series E. Focusing on therapeutics, medical diagnostics, vaccines and healthcare services, they manage four funds worth more than $700 million and have invested in many companies that have gone on either to be bought by larger businesses or to launch their own IPO. These include Horizon Discovery, Heptares Therapeutics and Cheetah Medical.

The Octopus Group is an investment firm that has had more media attention than most as a result of its involvement in companies that trade in consumer goods and services. Octopus Ventures is its less well-known life sciences wing, founded in 2000 to provide investment in healthcare, finance and deep tech businesses from seed stage to series A. It has a fund of £1.2 billion under management and typically invests £1 million in seed funding and up to £5 million for series A. Its total investment in an enterprise can reach as high as £25 million.

Worldwide investment reached a high of $63.3 billion in 2021 and this figure looks set to be exceeded in 2022. The UK currently sets the record in Europe, with more than double the amount raised in Germany, the largest economy in the EU. Europe, on the whole, lags behind China’s $16 billion, with $12.3 billion in 2021. One of the reasons for the spike in the UK is seven funding rounds that were all in excess of £50 million. Six of the companies to benefit are in the Golden Triangle Life Sciences Cluster of Oxford, Cambridge and London. CMR Surgical is a Cambridge Medtech company developing surgical robotics, which in June 2021, raised £425 million in series D funding. On a smaller but still extremely impressive scale, Oxford Nanopore Technologies raised £202 million in August 2021 to continue its development of portable high-throughput sequencing devices.

The longer-term influence of the abundance of venture capital is shown in the number of IPOs launched by some of these startup and scaleup enterprises. As we mentioned earlier, the UK’s Life Sciences Investment Programme is another significant boost to the industry, undoubtedly encouraging investors to look seriously at the sector. Funding will be made through British Patient Capital (BPC), the commercial arm of the government-owned British Business Bank. BPC will provide up to 33% of the total commitment in concert with private investors. The initiative compensates in part for the loss of access to the European Investment Fund since the UK’s withdrawal from the EU.

Meanwhile the level of US investment continues to be stratospheric by comparison. The biggest two players are RA Capital Management in Boston and OrbiMed, a New York firm. They are the only two companies to occupy the two top spots in the charts of both total dollars invested and the number of funding rounds led. Both invested more than £6 billion in 2021. The gulf between the USA and all other countries is vast, but the life sciences and biotech sectors are global ones. The upsurge in the UK could well tempt some of that American money across the Atlantic.

If you’re a Pre-Seed, Seed or Series A stage life sciences startup, and you have questions about improving your sales strategy, sales execution and getting traction with your sales operations, book a call with our experts today.

If you found this insight regarding biotech startups and life sciences start up interesting, we recommend reading Women in Life Sciences

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