Merck KGaA doubles size of VC fund, bringing cap up to $340M

Merck KGaA

Merck KGaA has doubled the size of its venture capital fund. The funding boost, which raises the cap on the fund to €300 million ($340 million), is part of an expansion in the scope of the investment unit, which will now funnel money into companies operating in all the sectors in which Merck KGaA is active.

When Merck KGaA set up its VC unit in 2009, the fund was aligned to its Serono drug development operation. Now, the fund will work across all of Merck KGaA’s business areas--healthcare, life science and performance materials. Merck KGaA has also added a fourth unit, new businesses, to give it a way to keep tabs on emerging areas into which it could expand the company. The company singled out “digitalization” as one potential area of interest.

“The investments of the Corporate Ventures fund will be aligned with the strategic interests of Merck KGaA, Darmstadt, Germany, though formally separated by a Chinese wall,” Roel Bulthuis, managing director of the fund, said in a statement. “With our infrastructure of a leading science and technology company we provide startups with the support they need to make their vision a commercial success.”

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The broadening of the scope of the fund has been accompanied by a jump in its size--from around $170 million to $340 million--and the establishment of teams of investors focused on each of the sectors addressed by the fund. By doubling the size of the fund while quadrupling the number of industries in which it invests, Merck KGaA has potentially done little to enhance its ability to finance biotechs, although the expansion does mark a further internal validation of its activities in the field.

When Merck KGaA set up the VC fund, then called Merck Serono Ventures, it gave it just €40 million to invest over a 5-year timeframe. By 2013, the company had increased the size of the fund, which by then had taken on the snappier moniker of MS Ventures, to €100 million. With the cap on the fund now standing at €300 million, Merck KGaA has increased its size by 650% over 7 years.

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