Investors like European med-tech companies

The current monthly Bulletin of Go4Venture describes the European investment activity in April. The transaction levels in April are broadly in line with last year, and the exit environment is also proving relatively steady. From a funding standpoint, April was dominated by med-tech. The research team of Go4Venture is „very bullish on med-tech, partly because of demand (stimulated by the greying of the developed countries’ populations) and partly because of supply trends (equipment moving from analog to digital and, of course, the power of connected health and related big data)”. In April no less than half the funding transactions mentioned in the monthly report were from the med-tech space, with names of investors that are not seen so often in the bulletin: two funds linked to SAP co-founders (Aeris Capital in Curetis and Dievini Hopp Biotech Holding in Novaliq), as well as Lundbeckfond Ventures, financed by the foundation behind quoted Danish pharma Lundbeck (in DySISmedical), and the Kuwait Life Sciences Company (KLSC), a Kuwaiti healthcare fund (in SuperSonic Imagine). These names are not representative of the investors typically engaged in European venture (where Information and Communications Technology (ICT) and internet investments dominate if we exclude – as the Go4Venture bulletin does – drug development), but very illustrative of the growing diversity of investors we see involved in the market.

Other interesting transactions in April show how high the bar has been raised for early-stage companies in a market where later-stage businesses get the bulk of investment. Local plays, with poor metrics after a couple of years, should simply not try VC financing – the market has moved on. Better to cut your losses and join another start-up – as Silicon Valley entrepreneurs do all the time.

On the other hand the authors of the bulletin see “more experimenting at the early stage” reflecting lower barriers to entry as technology costs go down and more support is provided to budding entrepreneurs (e.g. incubators, tax subsidised funds and crowdfunding platforms. But in the perspective of the Go4Venture research team the wave of crowdfunding platforms should not be seen as an alternative to venture funding, but more like a ruthless training ground and feeder for the heavier guns that are VCs – particularly in Europe, where pesky borders make the experience and contact networks of professional investors invaluable.

The bulletin can be downloaded at the Go4Venture website.