EMBL bucks venture trend with first close

Life sciences-focused venture firm EMBL Ventures has held a first close for its second fund on €40m, despite institutional investors’ recent apathy towards venture in general.

EMBL Ventures, the venture capital arm of the European Molecular Biology Laboratory, has held a first close for EMBL Technology Fund II on €40 million, according to a statement.

The firm is targeting in excess of €50 million for the fund, according to managing director Jan Adams. Fundraising began in Autumn last year, he added. No placement agent has been mandated to assist with the fundraising.

The close comes two months after US venture group Sofinnova Ventures closed its eighth fund, a life sciences-focused vehicle, on $440 million after a rapid seven month fundraising.

The firm makes investments in European biotechnology and medtech companies with innovative early-stage technologies and products. It targets equity investments in the €2 million to €5 million range, it said. EMBL’s first fund, which closed in 2003, raised €26 million.

A source close to the process admitted fundraising for venture is challenging in the current environment. “There is little to no enthusiasm from institutional investors such as banks and insurers for venture in general, regardless of what colour it comes in, due to the illiquidity of the asset class, disappointing historical returns, the risk / rewards profile, and perceived superior returns in the buyout sector,” the source said.

Despite this, EMBL has been able to source commitments from both existing and new LPs.

ERP-EIF Dachfonds, a venture capital fund of funds, is the fund II's cornerstone investor, EMBL said. Markus Schillo, head of ERP-EIF, said: “The current fund raising environment forces management teams to develop new and sustainable investment strategies. We are convinced that EMBL Ventures’ approach with a focus on capital efficiency and significant innovation meets these criteria and that the team will continue to translate this strategy into successful investments. We believe that through our commitment to ETF II, we are supporting an important and successful player in the early stage venture capital sector in Europe”.

Other investors include the European Communities Growth and Employment Initiative, MAP.

Iain Mattaj, director general of EMBL in Heidelberg, Germany, said: “Basic and translational research that benefits our member states and beyond is one of EMBL’s missions. Through EMBL Ventures we will continue to leverage the network and scientific excellence of EMBL as Europe’s flagship research institute to achieve this goal.”

EMBL’s previous investments include Affectis Pharmaceuticals (multiple sclerosis, pain), Elara Pharmaceuticals (oncology), Fibrex Medical (cardiology), Immatics Biotechnologies (oncology) and Lipid Therapeutics (gastroenterology).