Heal Capital closes debut fund on €100m

The fund was launched in December 2019 with a target of €100m and held a first close on €80m in January 2020.

Poellath provided legal advice on the fundraise. The VC did not work with a placement agent.

"There has been a lot of attention for healthtech, and our team has been ramped up and largely completed now," Heal managing partner Christian Weiß told Unquote. The Berlin-headquartered firm announced in January 2021 that it had hired investment professional Hana Besbes, as well as investment fellow Magdalena Plotczyk.

Speaking about the fundraise, Weiß said: "We got a lot of inbound interest, more than we could process in the end, and, as we had a first close with a decent commitment, that was a comfortable position to be in to calmy finalise the process. It was a smooth process all in all, given the topic and the interest."

Weiß sees significant opportunities in the developing European healthtech market, he told Unquote. "We have seen several exits recently, and now the Digital Care Act in Germany is in place, so I don't think the market could be any more dynamic. It will be interesting to see how the exit environment will develop – we have seen some large exits in the US, and exits such as TeleClinic (with an exit to ZurRose) and Smartpatient (with an exit to ShopApotheke) in Germany. Those were for long-term players in classic digital health. The question is where the healthtech exit potential will be next, and will it be like the US in magnitude? This will be very important for our portfolio companies."

Investors
Regarding the fund's LP base, Weiß told Unquote: "After the first close, we continued discussions with LPs and potential LPs, which we finished up over the past year. We have roughly 20 LPs, all of which are from the insurance industry in Germany and also internationally – all institutional asset managers."

The fund intends to remain independent by not being connected to any specific corporations in the healthcare and life sciences sector, as reported by Unquote.

Investments
The vehicle makes investments in healthtech companies based in Europe, participating in rounds from the seed stage onwards. The vehicle has so far made three investments: neuromodulation therapy platform CereGate; AI-backed triage platform Infermedica; and Siilo, a communication app for healthcare professionals.

The fund deploys average equity tickets of €3m in initial rounds, but can deploy €3-5m, with up to €15m available for a platform investment. Half of the fund will be held back for follow-on investments.

"In total there will be 20-25 investments; we're always looking to close four to six per year and we are well on track for this," Weiß told Unquote. "There are a couple of announcements outstanding at the moment."

"It's hard to say how long we will hold companies for, but it will be interesting to see – we are looking to build European healthtech champions, so it depends on how long this takes – and in healthcare, things sometimes can take a bit longer," said Weiß of the VC's projected holding periods. Asked about the returns that Heal Capital expects to see on its investments, Weiß said: "We're looking for 3x returns to place us as a top-performing venture fund, but it's early to say."

Weiß expects the healthtech market will increasingly present interesting acquisition opportunities for both trade buyers and financial sponsors. "Trade sales are opening up, but there are more and more business models that are being ramped up, with models appreciated by traditional sponsors emerging. I'm convinced that we will see more and more of this. There are also efforts being made in building complete healthtech systems, with telemedicine, doctor-patient engagement, and symptom checkers."

People
Heal Capital – Christian Weiß (partner, managing director).

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