Earlybird, a German venture capital firm, has announced the closure of a €173 million fund dedicated to healthtech. This second fund of its kind from Earlybird aims to invest in startups within the biopharma, medtech, and digital health sectors. Investments will range from €3-8 million at Series A and B stages. Notable backers include British Patient Capital and Barmer, one of Germany’s largest public health insurers, along with contributions from family offices, an endowment fund, and a bank.
Focusing on biopharma’s potential
The fund will allocate about half of its resources to biopharma startups. The remaining funds will be split between medtech and digital health initiatives. This strategic investment underscores Earlybird’s commitment to exploiting the “unprecedented opportunity” in biopharma, according to principal Christoph Massner. With the approaching “patent cliff” in 2030, where $200 billion in annual pharmaceutical revenue is at risk, pharma companies are eagerly acquiring startups with promising new drugs.
Strategic investments and the M&A landscape
Earlybird has already made four biopharma investments from this new fund, including stakes in ImCheck Therapeutics, Oculis, Grey Wolf Therapeutics, and Ariceum Therapeutics. Massner highlights the mature M&A market in biopharma, where acquiring innovative companies has been a longstanding practice. He notes, “Biopharma is a very mature M&A market — they’ve been buying innovative companies for decades.”
A cautious approach to digital therapeutics
While optimistic about biopharma and medtech, Earlybird is more cautious about digital therapeutics. Slow adoption rates and a fragmented reimbursement system across Europe pose challenges for startups in this sector. Massner points out the difficulties in building a venture case for digital therapeutics, given the absence of patents and regulatory hurdles.
Expanding horizons
Earlybird’s focus remains predominantly on Europe, with an openness to investing in the US and Israel. Massner praises the innovation emerging from the UK, Switzerland, and France but also acknowledges the rising potential in southern European countries like Italy and Spain. This marks a shift towards recognizing innovation beyond traditional hotspots.
The fund’s strategic direction not only reflects a keen interest in advancing healthcare technologies but also a broader vision for nurturing innovation across Europe and beyond. With a keen eye on the future, Earlybird’s new fund is set to make significant contributions to the healthtech landscape.
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