Company creation and early-stage investing in life sciences: A Novo Seeds perspective
Stephan Christgau, Senior Partner at Novo Seeds.
There is an abundance of promising scientific research that has the potential to deliver innovative therapies and better treatment for patients, but the road from academia to commercialisation remains challenging. Many incubators, technology transfer organisations and regional seed investors provide funding and support for aspiring entrepreneurs, however, this early part of the ecosystem remains fragile. A disconnect often exists between many locally-focused seed investors and international venture funds that have grown in size over the last few years, and thus look for investment opportunities where teams, development plans and assets are developed to a mature stage and where larger financing rounds are enabled.
Since Novo Seeds’ inception in 2007, our investment strategy has enabled us to create and build biotech companies to a stage where they can attract the large financing rounds needed to bring them to real inflection points. On behalf of the Novo Nordisk Foundation, we administer pre-seed grants of up to approximately €500,000 to early academic projects that are too early for investment, but where we see potential. With the pre-seed grant, projects can perform key proof-of-concept experiments as well as fund completion of initial development plans.
Novo Seeds have built a team of repeat entrepreneurs, anchored in our entrepreneur-in-residence programme, BiOrigin. The team work with founders to build the necessary internal functions as interim management. Importantly, we have the possibility to invest in very early companies making them “Series A ready” and we have the capability to fund the companies through all stages from these very early seed rounds, all the way to an exit. We place a high emphasis on syndication; it spreads the risk; our fellow venture funds bring additional valuable networks and competencies and, importantly, having a clear goal to add investors ensures that we work to build companies on par with the best to attract international capital. Good examples of companies we have built and funded include NMD Pharma, which completed a €38 million Series A round in March 2018, and Galecto Biotech, which completed a €79 million Series C round in October 2018. Both of these companies started as pre-seed projects, and we worked with the founders since the very inception to assist in building a strong investor syndicate, attract the relevant talent to boards and advisor panels, and to support the companies’ strategic direction.
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