Wellington Partners has raised a €210 million ($234 million) life science fund to back biotechs in German-speaking parts of Europe and beyond. The fund sets Wellington up to invest in 15 to 20 drug development and medical device companies.
Going into the raising of its fifth life science fund, Wellington hoped to secure up to €150 million to invest. That target was well above the €85 million Wellington raised for its fourth fund but in the end was comfortably exceeded. The difference between the sizes of the fourth and fifth funds reflects the evolution of the European life science sector since Wellington closed the previous vehicle in 2012.
“That was a time when convincing investors to invest in private European biotech companies was really difficult,” Rainer Strohmenger, managing partner at Wellington, said.
Since then, the performance of Wellington—which backed Rigontec on route to its takeover by Merck—and the wider European private biotech sector has convinced more people of the value of investing in the asset class. The closing of Wellington’s upsized round follows quickly after its European peer Medicxi raised €400 million in six weeks.
Wellington, like Medicxi, is sticking with the strategy that served it well in the past. But the additional capital means it is placed to take larger positions in biotechs and play a lead role in sizable financing rounds.
“The previous fund was definitely too small for biotech companies. We are now at a size where we can really lead significant rounds in European biotech companies,” Strohmenger said.
Wellington, having held the first close of the fund late in 2017, has already begun to invest the new vehicle, resulting in the addition of seven companies to its portfolio. That experience and the pipeline of upcoming opportunities has convinced Wellington that, despite the resurgence of European life science venture capital, there remains an abundance of biotechs to back.
“The European market is still undercapitalized. We see plenty of investment opportunities. I would estimate that the number of investment opportunities in private European biotech and medtech companies is probably as high as in the U.S,” Strohmenger said.
Even so, with European VCs raising new funds and their U.S. counterparts looking for opportunities to invest across the Atlantic, biotechs can secure money from a larger pool of organizations than in the recent past. Wellington thinks the connections it made during its lengthy and continuous history of backing European biotechs mean it will get a look at the most promising investment opportunities.
“We have a very strong position, especially in Germany and the German-speaking part of Europe, because we have continuously been in the market, been active as investors, while some of our colleagues during the years of 2010 through 2013 did not have much new capital to invest,” Strohmenger said.