Seventure holds first close of €200M microbiome fund

Seventure Partners has held the first close of its second microbiome fund. The Novartis-backed fund is more than halfway to its €200 million ($227 million)-plus fundraising target, setting up Seventure to invest in around 20 microbiome startups.  

Paris-based Seventure will invest a sizable slice of the money in European seed and venture-stage startups working on microbiome drugs and diagnostics. Some of the money will go to startups in other geographies, notably the U.S., and fields including health and nutrition. But as with the first fund, which put two-thirds of its money into drug and diagnostic startups, biotech will be a key area. 

The main difference between the two funds is their size. Seventure aims to close the new fund at over €200 million, meaning it will have at least €40 million more to play with. 

"This fundraising ... has been much easier," Seventure CEO Isabelle de Cremoux said. “This year, I've received many spontaneous calls from investors that have made their own decision that they want to invest in the microbiome. That never happened four years ago.”

Seventure introduced its first Health for Life Capital microbiome fund late in 2013 and secured the support of Novartis two years later. Over that period, the microbiome went from a niche field to one of the hottest areas in biotech, in part due to Seres Therapeutics’ $134 million IPO that sent interest and expectations into overdrive. 

Rising interest in the microbiome helped Seventure to ease past its €120 million target for the first fund, which ultimately topped out at €160 million. But, in line with the predicted technology hype cycle, the period of rising expectations came crashing to an end when Seres, the totemic microbiome biotech, flunked a phase 2 clinical trial.

"It brought a lot of doubt to the community," de Cremoux said.

More than two years have passed since the Seres readout and de Cremoux thinks interest in the field is now back on an upward trajectory, in large part because of the proliferation of other clinical-phase assets. Some of the trials will read out this year. And, while the nature of clinical development means some studies will fail, de Cremoux thinks there will be enough positives to validate the field. 

"Those phase 2 data will convince the remaining skeptics," she said. 

De Cremoux and her colleagues will spend the first half of the year raising money with a view to holding the final close of the fund in the summer at north of €200 million. Seventure is already more than halfway to that target as a result of the interest of new investors and the willingness of 90% of the first fund’s backers to commit to the new investment vehicle.