415 Capital holds first close for maiden fund

The fund held a first close on €45m following approximately 18 months on the road. The vehicle targets its hard-cap of €85m and aims to hold a final close in Q3 or Q4 2020.

P+P Pöllath + Partners provided legal advice for the Germany-based vehicle. The fund will follow standard market terms and conditions, with a five-year investment period.

Frederik Groenewegen, managing director at 415 Capital, explained why he and fellow managing directors Frank Groenewegen and David Thompson felt the time was right to raise a fund: "The three of us have already worked together and invested together with our own money, and we have an operational background in the medtech space, where we understand the business models well.

"It was more like an evergreen model before. We made 45 investments and we were successful in our private investments, making around 5x returns over the last 10 years. We felt that we were sometimes missing opportunities and leaving money on the table, as we had to resort to syndication and bring in other people, so the fund was a natural next step."

Groenewegen also told Unquote that the team has realised six exits in the past 20 months. The team sold Rebound Therapeutics to Integra Lifesciences in 2019 and exited Claret Medical to Boston Scientific in 2018. Unquote sister publication Mergermarket reported that the sale of Claret Medical was valued at up to $270m.

Investors
European Investment Fund is the vehicle's cornerstone investor. KfW has made a significant contribution to the fund, Groenewegen told Unquote. The fund will also be backed by a number of family offices and entrepreneurs, with fewer than 15 investors in the first close, according to Groenewegen. The first close saw a GP commitment of 20%.

Investments
The vehicle will target startups developing technologies and medical devices to diagnose and treat cardiovascular disease and its associated risk factors, including coronary artery disease, strokes, hypertension and vascular disease.

"Cardiovascular disease is the biggest cost driver in the medical system," Groenewegen said, "and combined with macro trends such as population growth and industrialisation, there are plenty of opportunities to invest in new technologies here. From the operational perspective, we know the market quite well, as we have been running companies in this business – we are connected to 200 hospitals with a focus on this area. We understand the business models well and we know the strategies that have previously bought these businesses."

The fund will focus on series-A rounds, according to Groenewegen, but it will also participate in seed and series-B rounds, and will typically be part of a syndicate. The vehicle will commit a total of approximately €5-7m per company and plans to invest in 10-15 businesses. Around two thirds of the fund will be allocated to businesses in Europe and one third to US-based companies.

Groenewegen told Unquote that the vehicle will offer co-investment opportunities to LPs for larger ticket sizes in series-B or later rounds.

The vehicle already has deals in the pipeline, Groenewegen told Unquote, with one deal expected to close in February 2020.

People
415 Capital – Frederik Groenewegen, Frank Groenewegen, David Thompson (managing directors).

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