New VC fund to fill European medical devices equity gap

NBGI Ventures has launched a new fund, the NBGI Technology Fund II LP. With a first closing of €30 million, the firm is looking to invest €60 to €80 million in early stage medical technology companies in Europe. The fund operates from offices in London and Athens.

It’s the second of two funds, which together have €90 million to invest in innovative medical devices, including, “cardiovascular devices, orthopaedic devices, imaging equipment, ophthalmology companies and a number of sub-sectors within that group,” said Aris Constantinides, founder of NBGI and fund manager.

Constantinides will draw on his experience as board member of devices companies including Forth Photonics, SuperSonic, Bone Support and Reverse Medical and as former vice president of venture capital firm DB Capital Venture Partners. He spoke to Science|Business about the investment strategy.

How much do you invest in each company?

Typically, we invest from the lower end of €1 million to €9 million. We tend to co-invest with other funds that follow similar principles and have a similar strategy to us so we can be more effective. We’re really not going after more than 8-10 companies. We pick our targets directly and then we back them with as much money as we can.

Which countries do you tend to target and why?

These targets are most often situated in the UK, France, Germany, Switzerland and Scandinavia. Once we invest in a company, the markets for medical devices are global and it’s very important for those companies to be able to sell the device not just in Europe but also in the US.

What are your main criteria for investment?

The company must have outstanding technology showing clinical benefits in terms of saving lives, predicting disease or reducing costs.

The company must own the IP and ensure there are no competing intellectual property holders who could limit the company’s freedom to operate. The company must also offer protection from replication.

Priority is given to companies with a complete commercial and scientific management team; however, in rare exceptions NBGI will assist in developing the team.
The product must address a large market in a competitive landscape

What kind of further investors are you seeking and what do you offer them?

Currently NBGI’s main investors are the National Bank of Greece and the European Investment Fund. Discussions are ongoing regarding further investment. We are primarily looking for institutional or corporate investors. Our minimum investment amount would be €5 million and our investors need to have an understanding of the healthcare and medtech space.

Potential investors are being offered a ten year return on a 5 year investment life. Rather than promising a return, we indicate the expected venture capital return which would be in excess of 40 per cent growth per year.

Why does the fund focus on high-risk early-stage companies?

We feel that there are a lot of innovative technologies in the medical space that do not have the commercial ability, skills, or resources to move onto the commercial stage. That’s the gap that we’re trying to plug; we help these companies to become commercial companies and not just scientific labs or innovators of technology. We provide a careful and logical plan towards achieving that commercialisation.

Why have you chosen to focus on medical technology?

Few funds are operating in the area of medical technologies. This is a sector that we feel provides a lot of opportunity and the demand for capital from such early stage companies is often much greater than the supply of capital, so we can be selective as to the opportunities that we chase.