Funding and investment is one of the largest challenges facing the bio-based industry today. The expensive production processes and biotechnology doesn’t come cheap. One venture capitalist looking to ease this process is Sofinnova Partners, a European venture capital firm specialising in life sciences. They have recently announced their first closing of Sofinnova Industrial Biotech I (Sofinnova IB I) at €106 million. The venture capitalist has also invested in the likes of bio-based plastic bottles and DNA synthesis. The fund, dedicated to renewable chemistry, follows a series of nine investments in the sector since 2009, and places Sofinnova Partners at the forefront of this promising emerging market. For the start-ups in the industry, this presents good news as the firm wishes to invest along the value chain from the transformation of renewable raw materials, like agricultural waste or C02, to renewable end-products such as bio-plastics and other bio-sourced materials.
In our recent 5 minute interviews with start-ups in the industry, they expressed some of their personal challenges:
Tom Cridland, the Tom Cridland brand owner said, “It was a struggle to start up the business which such limited funds, so even when you have a great idea executing them can be difficult without financial backing.” Similarly, Bert van Son, the CEO and Founder of Mud Jeans stated: “Well from my own experience, [my biggest challenge] would have to be financial support. It is important to have investors and money to get the turnover going, as well as generating a good volume of products. So far we have had a lot of help and interest from universities in particular so the demand is there we just need that financial push.
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But Sofinnova Partners is hoping to provide this “financial push.” Their investment thesis is based on growing market demand for innovative, renewable products leveraging non-fossil raw materials and novel technologies to produce better performing or cheaper, sustainable alternatives. It will equally look at technologies coming from advances in synthetic biology and alike.
Based in Paris, the firm brings together twelve professionals from all over Europe, the US and China to focus on paradigm shifting technologies alongside visionary entrepreneurs. Sofinnova Partners seeks to invest as a founding and lead investor in start-ups and corporate spin-offs, and has backed nearly 500 companies over more than 40 years, creating market leaders around the globe. Today, Sofinnova Partners has over €1.6 billion under management. They will seek to invest in eight to ten companies during the next three to four years.
For this substantial first closing, Sofinnova IB I attracted premier investors, predominantly European institutions and major international industrial players, from energy, chemical and agricultural sectors, including several returning investors from the seed fund raised in 2012 in the same sector: Sofinnova Green Seed Fund.
Denis Lucquin, Managing Partner at Sofinnova Partners, said, “We are very pleased with the success of this first closing… With investments in the sector ranging from Avantium, developing an entirely bio-based plastic bottle and now planning an IPO on Euronext, to the most recent DNA Script, revolutionising DNA synthesis, Sofinnova Partners stands as a pioneer investor, benefitting from an acute understanding of the dynamics at work in this emerging sector. With establishment of this entirely dedicated fund, we have reached today a further important step in our development in industrial biotech.”
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