Benelux healthcare funds and exits prosper while dealflow dips

Compared with the 17 VC healthcare investments recorded in 2013, Benelux has seen around half of that amount so far this year, according to unquote" data. However, this decline has not stopped firms from fundraising successfully. At the end of 2013, Gilde Healthcare Partners held a final close for its fourth vehicle, Gilde Healthcare III (GHC III), on its target of €145m. In March of this year, Life Sciences Partners closed its Health Economics Fund (HEF) on €112m, exceeding its €100m target.

Most recently in September, Dutch firm Aglaia Biomedical Ventures announced the launch of its newest oncology fund. With $65m already secured from a network of new and existing investors, Aglaia Oncology Fund II has a target of $80-100m, which it hopes to reach within the next 12 months.

"With our second fund, we continue to follow the approach as defined under our first fund – a stringent focus on oncology, early-stage investments and a hands-on approach," says Aglaia partner Karl Rothweiler. "A specialist oncology fund appeals to certain investors like family offices because of the social impact it may have and the fact that these investors can associate themselves with a defined target indication within life sciences."

While LPs in Aglaia's first oncology fund were mainly family offices, Oncology Fund II has also secured capital from several institutional investors alongside many of the firm's existing private backers. The European Investment Fund and the European Investment Bank-backed risk capital resources mandate have jointly committed €20m to the fund.

The fund will invest in 10-15 start-ups in the life sciences sector with a strict focus on businesses developing anti-cancer therapies. "The challenges more often come from dealing with early-stage companies than from managing a specialist fund," says partner Mark Krul. "Often a company does not exist and we have to build it from scratch."

VCs refocus
Rather than being a negative, the dip in dealflow could be viewed as a result of the region's VCs focusing their efforts elsewhere, which is made evident by not only recent successful fund closes, but also the impressive exits that have been carried out so far this year.

According to unquote" data, exits within Benelux's healthcare sector have reached a total value of more than €700m so far this year, easily surpassing the more than €430m generated in 2013. Recent exits include the $200m sale of Sapiens Steering Brain Stimulation by an investor syndicate including Gilde Healthcare and Wellington Partners.

Furthermore, Gilde Healthcare- and Forbion Capital Partners-backed uniQure raised $91.8m in its February IPO, giving it a market cap of $285.5m.

"We are enjoying an extraordinarily good Dutch year," says Pieter van der Meer, a managing partner at Gilde Healthcare, which has exited five Dutch portfolio companies in the past 12 months. "In our portfolio alone we were able to sell ProFibrix, Pharmaline and Sapiens to strategic acquirers at significant multiples. In addition, we listed uniQure and ProQr on the Nasdaq."

Van der Meer also points out that, on average, the amount raised in funding rounds is increasing. In April, ProQR raised €42m in a round led by Sofinnova Partners with participation from Gilde Healthcare. In September, Gilde Healthcare led a €12m round for AM-Pharma alongside a large syndicate of existing investors.

"We see many tangible signs of an attractive market," says van der Meer. "The average size of private funding rounds is increasing. There have been three recent Nasdaq listings, increased appetite from US-based investors and several rewarding trade sales. In our view, Benelux is at historic heights."

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