Panakès Partners closes second life sciences fund on EUR 175m

Purple Fund, formerly known as Panakès Fund II, is around EUR 75m larger than its predecessor, Panakès Fund I, which launched in 2016 to focus on Italian medtech.

The fund was launched in June 2020 and originally had a target of EUR 110m that was later extended to EUR 180m, as reported. It was expected to remain open for additional LPs until the end of 2021, reflecting the ongoing difficulties that large and small managers alike are facing in gaining the attention of LPs.

The new fund will slightly switch focus, keeping two-thirds of its capital to deploy into medtech, with the remaining third for more traditional biotech therapeutics, managing partner Alessio Beverina told Unquote.

"As of today, there are around four Italian funds investing in this space but no other medtech venture capital firm," he said. "For medtech, investors are mostly coming from outside Italy."

Investors
Around 90% of the fund's LPs are Italian, made up of institutional investors, corporates and family offices, with cornerstone investments from state-backed fund-of-funds FoF VenturItaly and the EIF.

Smaller LPs include Menarini, the Cogliati family (Elemaster Group), the Colombo family (SAPIO Group), the Rovati family (Rottapharm Biotech), the Petrone family (Petrone Group), the Re family (Digitec Group) and the Bassani family (Movi Group).

"Many of the LPs were already investing in the asset class outside of Italy, but the Italian venture capital market is growing fast compared to countries like France and the UK, so they want to be putting more capital in the Italian ecosystem," Beverina said.

Purple Fund is the largest Italian life sciences venture capital fund in terms of deployment, the GP said in a statement.

Investments
Panakès Partners expects to make around 15 investments over the fund's life cycle, which comprises a typical five-year investment period and a five-year divestment period, Beverina said.

Its sweet spot is Series A but it can also look to seed and Series B, typically deploying around EUR 10m tickets.

Within medtech, it can look at areas like diagnostics and digital health. 

Geography-wise, it is focused on core European markets including Italy, the UK and Switzerland, plus Israel and North America. 

The fund is now in deployment mode, with its first investment joining a EUR 1.6m round for Approxima, a medtech spin-off of Politecnico di Milano that is developing a minimally invasive tricuspid valve repair system.

It has signed two other investments that are much larger but still in stealth mode, Beverina said.

"My firm receives annually more than 1000 opportunities, which has increased dramatically since Covid," he said. Now is a good opportunity to be deploying a new fund because we can get a better price than a few years ago when valuations are higher.

"The best funds are raised in down years - I'm betting on that particular fact," he added.

Beverina added that the impact on valuations is unlikely to hit the 12 investments made via Fund I, because most have at least 18 months' runway on existing fundraising, by which time he hopes that the market will have picked up. 

In 2022, its portfolio companies raised more than EUR 210m from Italian and institutional investors, including a USD 75m Series B for Italian microsurgery developer Medical Microinstruments, where the GP was the only Italian investor. 

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