The startups from the BioRegion have beaten investment records in little over six months
By July 2022, the health startups in Catalonia had already raised 296 million euros, exceeding the total figure for 2021. However, the international situation and generalised stringency in investment call for caution in year-end forecasts.
The volume of investment in health startups in Catalonia has beaten records in little over six months to stand at 296 million euros in July 2022, multiplying the volume obtained during the same period last year by 2.5. This figure therefore exceeds total investment raised in 2021 (238 million euros).
Without any precise figures for year end, 2022 is expected to be the year in which we break the 300-million-euro barrier in investment, two years after having exceeded 200 million in financing raised for the first time.
100-million-euro mega-round by Impress
The largest venture capital operation for this period was in the medical technologies sector. Impress, the dental health startup established in Barcelona in 2019, has raised 100 million euros, the highest-yielding round in the history of the BioRegion and known as a mega round for having reached one hundred million. This operation has led to growth in the medtech subsector that, with 110 million, has reached its historic maximum (104 million euros in 2021).
The fact that the largest round of these first few months of the year was in dental health is in line with the international situation. InBrace, with head offices in California, raised 102 million dollars last year, and the aligner company bbyte was taken over by Dentsply Sirona in 2020 for 1.040 billion dollars. In fact, Vladimir Lupenko, CEO and co-founder of Impress, already forecast last year a “bright future” for the dental health market and, in this Biocat post, predicted its attractiveness to investors by providing a solution to a problem that affects the world population as a whole.
In the remaining subsectors, the rise in investment in biotechnology must be underlined that, with 150 million euros, has exceeded the highest figure reached to date (147 million euros in 2020). This increase was primarily due to two record venture capital operations in this segment: the 51 million of Minoryx Therapeutics and the 50 million of SpliceBio. Digital health also raised 30 million euros, which is roughly the same figure as in 2021 for this period.
Over 100 international investors have now chosen to support startups from the BioRegion
Once again this year, the role of international funds in obtaining most of the venture capital operations has been a decisive one. The total number of international investors to have invested in startups from the BioRegion to date stands at 110. The most significant growth was between 2019 and 2022, when the number of international firms investing in business projects regarding health doubled (from 43 to 110), obviously also coinciding with a significant increase in total investment raised.
The solid network of specialist inventors established in Barcelona has been key in raising awareness on local projects, although the quality of the companies has also played an essential role. According to Joël Jean-Mairet, founding partner of Ysios, “with a minimum of one or two local operators who want to start a round, additional international capital is raised. What is important is that the projects are interesting.” Along these lines, Robert Fabregat, managing director of Biocat, indicates: “having funds with head offices in Barcelona has been one of the main pulls for attracting international capital to Catalonia, along with top-level research and the talent of the community of entrepreneurs and researchers.”
In general, international investment funds investing in the BioRegion are most from Europe (67%) –primarily the United Kingdom, France and Germany-, the United States (26%) and Asia (12%). Kurma (France), Mangrove Capital (the Netherlands), Idinvest (France) and Fund+ (Belgium) are the international firms to have jointly invested most in the rounds by startups from the BioRegion.
The new macroeconomic context calls for caution
The data indicated above place Catalonia in a parallel reality to the international stage discussed below. The drop in valuations, operations and stock market activity in the American and European markets makes forecasting the ultimate situation of the BioRegion at the end of the year difficult.
In the health sector, investment in venture capital dropped by 32% as a whole during this quarter of 2022, according to data from Dealroom. Asia is the continent to have recorded the greatest drop, losing 50% of the investment figure reached during the same period of 2021, followed by Europe, which was down 42%, and North America, down 25%. Lluís Pareras, founding partner of Invivo Capital, acknowledges that “the international crisis is extraordinary and the funds are reserving capital to be able to support their portfolio with more follow-on and, therefore, are investing in fewer new companies. Good companies will always be able to raise investment rounds, but it will take them longer to raise them.”
This general reduction in venture capital investment was particularly visible in the rounds of over 100 million dollars (mega rounds). In fact, according to Dealroom, there were only 99 rounds in the global health sector during this first half of the year for a value of 19.7 billion dollars, which is roughly half that of the same period last year when there were 189 totalling 33.5 billion.
In terms of IPO processes, the drop has been even more pronounced than in venture capital. Although 166 companies went public during the first half of 2021, only 25 have done so in 2022, which is an 85% reduction. Dealroom. Montserrat Vendrell, partner at Alta Partners, says that “the overall feeling is one of waiting for valuations to correct slightly and for the M&A to begin rising during the second half of the year. Pharma companies such as Pfizer, Astrazeneca and others linked to the COVID-19 vaccine must disburse capital.”
Faced with this international context, specialist investors from the BioRegion are cautious about the possible impact on our ecosystem. Clara Campàs, director and co-founder of Asabys believes that “this situation will make investment funds more cautious, but there is still capital to invest in good projects and we hope that the flow of private capital to the health sector continues to grow.” In fact, they are mostly optimistic and hope that the macroeconomic context will have less impact than in other regions where companies had higher valuations. Joël Jean-Mairet, founding partner of Ysios, “in terms of capitalisation, there is a lot of money in venture capital and the startup dynamics won’t change. In fact, it’s an opportunity for many, because late-stage investors are investing more early stage. What will change from now on are the conditions: we’ll switch to a period that is much more selective because there is no way of knowing how long this drop will last”, he explains.
Biocat will announce the total amount of investment raised in 2022 and the most relevant indicators of the life sciences and health ecosystem in Catalonia in the 2022 BioRegion Report, which is to be presented on 13 February 2023 in collaboration with ACCIÓ, CataloniaBio&HealthTech, Farmaindustria and Fenin.