25 May 2015

Finnish medical researcher among May’s angel investments

2015 appears to be on something of a downward slide in terms of the aggregate monthly value of European angel investment, according to Zephyr, the M&A database published by Bureau van Dijk. Although at the time of writing there are still ten days to go until the end of May, the month has so far posted a decline on April by volume and value. Unless May is able to surpass April by the time June rolls around, this will be the second consecutive monthly decline on both fronts. In May to date some EUR 33 million has been invested across 20 transactions, compared to 34 deals worth EUR 38 million in April. Even though last month looks to have been more impressive in terms of volume and value, it still lags some way behind both February and March, when there were 54 deals worth EUR 124 million and 51 worth EUR 126 million, respectively. However, a lot can happen in ten days and we could still see a number of larger angel investments which might push May higher than April and arrest the decline being witnessed at present.

April’s disappointing showing so far comes in spite of a couple of large deals by angel investment standards. The most valuable injection of the month to date was a first round of funding by Kano Computing, a UK-based manufacturer of a DIY computer building kit. Breyer Capital led the EUR 13 million round, with the participation of Collaborative Fund and Jim O’Neill. This transaction alone accounted for 39 per cent of all Western European angel investment announced in May to date. The month’s second-largest injection was worth almost half as much as Belgian energy management services algorithm and software developer Restore secured EUR 7 million from Limburgse Reconversie Maatschappij, Axe Investments, Ark-Angels Fund and a number of undisclosed individuals. As usual, a wide range of investment sizes was recorded over the month, from the high of EUR 13 million to a low of EUR 100,000.

As is to be expected, the software sector was heavily targeted by angel investors in May. However, a number of other, less frequently financed, industries also piqued their interest over the course of the month. For example, Finland-headquartered Synoste, which is developing correction implants used to correct skeletal deformities, raised EUR 800,000 in a first round of funding, although this amount can be raised to EUR 1.20 million upon certain milestones being reached. Participants in the transaction included High-Tech Grunderfonds Management, Finnvera, Lifeline Ventures, Mectalent, Metsola Ventures, Petri Poyhonen and existing angel investors. Commenting on the injection, Synoste’s chief executive, Harri Hallilla, said the firm had identified new market opportunities and will use the funds to follow these up and bring its products to clinical trial. As well as its headquarters in Espoo, Synoste has an office in Dusseldorf. Founded in 2012, the company is aiming to bring an improved and less painful device for limb lengthening procedures to market. At the same time as the angel investment, Synoste received a European Eurostars grant worth EUR 1 million.

There have been plenty of other angel investments in the commercial physical and biological research sector worldwide in recent years. Of deals in the industry announced between the beginning of 2006 and the present day the largest is a EUR 59 million round for Chinese immuno-oncology drugs developer BeiGene (Beijing), which completed in November 2014 with the participation of Hillhouse Capital Management and Citic Private Equity Funds Management, as well as undisclosed initial angel and strategic investors. The third-largest global angel injection in the sector actually closed in March of this year, when US-headquartered drug developer Nimbus Therapeutics secured EUR 40 million in a Series B round led by Pfizer Ventures and Lightstone Ventures, as well as existing investors Atlas Venture, SR One, Lilly Ventures Management Company and Microsoft founder Bill Gates. Proceeds of that deal have been earmarked for moving its pipeline forward with a view towards bringing its products to market.

To sum up, it remains difficult to say how May is going to shape up for angel investment activity. Without a few more investments the month will prove disappointing, representing as it would a second consecutive monthly decline. However, there is still every chance that this will not be the case as the ten days to go until the end of the month could easily produce enough investment to push results higher than April’s EUR 38 million and arrest the decline.

© Zephyr