No pain, no gain: Company-building French VC scores €250M for life sciences fund
In the Truffle Capital playbook, you either go big or go home.
The French VC firm does not bother with pitches from companies vying for investment — instead, it sources the raw material to build companies from scratch. On Wednesday, it unveiled a €250 million boost to invest in the life sciences, in particular, the realm of interventional medical devices.
The recipe for investment is arduous. The firm appraises about 1000 unpublished patent applications from the top 50 universities across the United States and Europe. After whittling the list to five per year, it goes about negotiating exclusive global licenses.
A major source of ‘disruptive’ science and technology is academia, but only some 20% to 30% of patents from universities give rise to companies because academic researchers tend to want to remain within the halls of academia, Philippe Pouletty, co-founder and chief of Truffle Capital, noted in an interview with Endpoints News. “So you have maybe 70% of patent applications which are left aside if you will.”
Once the technology is licensed, Truffle invents a name for the company, hires the management team and puts in millions to develop the tech — all the while remaining the largest, typically solitary shareholder. In the last 15 years, the firm has backed more than 70 companies — of which 80% were created by or with the support of Truffle teams. Altogether, 13 companies, such as Abivax, have gone on to make public debuts, while Truffle has made 17 exits, including sales to Stryker and Boston Scientific.
Truffle — which is named after the famous black truffles of Périgord, a region east of Bordeaux in south-west France inhabited by its co-founders — sets up its startups in France, but the European appetite for investment is eclipsed by investors in the United States, Pouletty acknowledged.
Getting between €30 to €50 million in a Series A funding is possible, but certainly, Euronext is not as powerful nor as deep as Nasdaq, he noted.
“So that means that when you want to grow further the company to the commercial stage, it’s more difficult,” he said. “So M&A is often the preferred route, which is why we’ve sold a number of companies, which is not great for the European economy because most of the buyers are US companies…soon they will be Chinese companies.”
But the investment climate in Europe is ripe for change, he added, noting that the French and German authorities are thinking of putting together a raft of incentives to channel more investment into the biotech and tech industries.
“So I’m quite optimistic that in the next five years, you should see companies being able to grow like in the US on Nasdaq and doing big secondary offerings.”
Created in 2001, Truffle Capital has raised over €1.1 billion so far. Aside from its fintech interest, the firm’s BioMedTech strategy is focused on technology that helps patients more efficiently and cost-effectively within the fields of cardiology, neurology, dermo-cosmetics, oncology, gastroenterology, and orthopedics.
The work has already begun. Five companies have been created with this new injection of funds, including HoliStick Medical, which is focused on treating serious cardiac ailments without open-heart surgery; Skinosive, which is working on technology to prevent skin cancers; and Artedrone, whose autonomous micro-robots are being engineered to prevent and treat cerebrovascular issues. Another three are slated for 2020, and the plan is to create up to a dozen companies in total.
“We build the company, we have 90% ownership, and if we succeed, we can say, thanks to Truffle otherwise this company would not exist,” Pouletty said. “If we fail, we say we were stupid and we don’t accuse someone else of mistakes. It’s our success or our mistakes.”