Venture capital financing of European life sciences companies could exceed the EUR 10 billion mark in 2021 for the first time
- FCF Life Sciences Venture Capital Monitor: Venture capital deal volume in Europe increases to EUR 8.3 billion as of end of July
- Dr. Mathias Schott: “Increasing interest of US investors accelerates growth in investment volume“
Munich, August 30, 2021
As of the end of July 2021, the venture capital financing volume of life science companies in Europe has already exceeded the total volume of the previous year. Total venture capital financing for life sciences to date amounts to EUR 8.3 billion. In 2020, the volume for the full year amounted to EUR 8.1 billion. This is one of the results of the “FCF Life Sciences Venture Capital Monitor – Europe” by Munich-based financing specialist FCF Fox Corporate Finance GmbH.
“The increasing interest of US investors in European life sciences companies is accelerating the growth in transaction volume,” says Dr. Mathias Schott, Head of FCF Life Sciences, adding, “With a possibly higher volume in the second half of 2021, it is possible that the EUR 10 billion mark can be exceeded this year.”
It is noticeable that the transaction volume was achieved despite a lower number of venture capital deals. While there was a total of 855 transactions in 2020, there were “only” 587 transactions in Europe as of the end of July 2021. “The higher number of large deals is the main driver for the increase in total volume,” emphasizes Dr. Schott. While the number of transactions with a volume greater than EUR 50 million amounted to 30 in 2020, it is already at 41 in 2021. Deals above EUR 50 million were responsible for more than half of the total volume as of the end of July (58 percent). In 2020, by contrast, this figure was only 43 percent. The average transaction volume as of the end of July was EUR 14.1 million, compared with EUR 9.5 million in 2020.
One possible reason could be the high amount of funds recently raised by European and US healthcare funds. In 2020, European funds raised in total EUR 2.1 billion for new investments, whereas by the end of July this year, EUR 2.9 billion had already been raised. US funds are currently slightly below the previous year’s level, with EUR 11.2 billion raised to date, compared with a total of EUR 13.6 billion in 2020.
The top 5 deals are above EUR 190 million each. The largest deal volume to date was EUR 497 million at CMR Surgical Ltd. from the UK. Among the top 5 investors, the US industry giant BlackRock is in first place, followed by Fidelity Management & Research (USA) and Novo Holdings (Denmark). More than half of the total investment volume (52 percent) was placed in the biotechnology sector. Oncology (prevention, diagnosis, therapy and aftercare of tumors and cancer) continues to be the area with the highest investment activity. It is also striking that the volume in the MedTech sector in July 2021 has already exceeded the total volume in 2020. In the HealthTech area, this is likely to be the case in August.
The FCF analysis also shows that more capital has come from abroad to date: In 2020, 62 percent of invested capital stemmed from foreign investors. In 2021, the figure is 65 percent as of the end of July. It is notable that the capital invested by US investors, at EUR 2.8 billion, is already 15 percent larger than in full year 2020 (EUR 2.5 billion). The interest of family offices is increasing: The FCF analysis shows that the volume invested by family offices in 2021, at EUR 190 million, is so far significantly larger than in 2020 (EUR 98 million).
However, the number and financing volume of smaller deals has so far been significantly smaller than in 2020. While the number of transactions with a volume of less than EUR 20 million in 2020 was 764 and the total volume was EUR 2.7 billion, as of the end of July it was only 489 and the volume was EUR 1.7 billion. ” We should keep an eye on how the number of smaller transactions for early-stage seed and series A financings will develop until the end of the year, in order to be able to react early to a possible financing bottleneck,” alerts Dr. Schott.
The analysis can be found here.
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FCF is a specialized Investment Bank and Financing Specialist, advising public and private small/mid-market companies in the German speaking regions.FCF focuses on four primary client segments:
- MidCap: Medium-sized companies with sustainable business models in typical “Mittelstand” industries, such as industrial products and machinery, automotive, communications, logistics, and consumer products
- SmallCap / Growth: Companies with revenues between €20 and €100 million and high / above average growth rates
- DeepTech: R&D-driven companies in technology sectors, entering the commercialization stage with initial fast-growing revenues
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FCF structures, arranges and places equity and debt capital transactions and supports its clients’ growth, IPO/Pre-IPO, acquisition and standard balance sheet (re-)financing strategies.
Founded in 2005 and headquartered in Munich, FCF has direct relationships and works with all leading German, European and international financiers, lenders and investment houses addressing German small/mid-cap companies.