VC Earlybird Health raises €173m for healthtech companies

Venture capital group Earlybird has launched its second health fund with €173 million ($185 million) at its disposal to fund companies in the health technology area, more than twice the amount raised in its inaugural €85 million health round in 2016.

The Germany-based investment company said the size of the fund, which will be used to support companies with “healthcare innovations that improve patient outcomes” – including digital health players –demonstrates increased investor interest in Europe’s healthcare sector.

It also said the Earlybird Health fund is the only one in Europe that includes public health insurers among its backers, which allows it to bring a payers’ perspective into its investment decisions.

That could be particularly relevant in the prescription digital health category, where some of the early companies have struggled to build sustainable businesses due to an uncertain and fragmented reimbursement environment.

In a statement, EarlyBird Health said it will support mainly European companies “from the early development stage to advanced technologies nearing regulatory approval and commercialisation”, in areas including digital health, diagnostics, medical devices, R&D tools, and biopharma.

The company uses an artificial intelligence tool called Eagle Eye in its hunt for promising deals, scouting out start-ups that are still in stealth mode and gathering and analysing information on more established companies.

“Eagle Eye will soon be the driver of a more effective, efficient, and inclusive deal sourcing and due diligence process for our investment teams,” said Earlybird principal Dr Christoph Massner, who added that the company is “proud to set the standard for dynamic and informed deal flow in the European healthcare sector.”

Companies supported by EarlyBird Health’s first fund included Swiss biotech Oculis, a specialist in therapies for diseases of the eye, which successfully completed a listing on the Nasdaq last year via a merger with a special purpose acquisition company (SPAC).

It also provided backing for French immuno-oncology company ImCheck Therapeutics, Swiss digital diabetes treatment company Oviva, UK cancer start-up Grey Wolf Therapeutics, Germany’s radiopharma specialist Ariceum Therapeutics and Ireland’s Priothera, which is developing a drug to support cancer patients undergoing bone marrow transplants and CAR-T cell therapy.

There’s no word yet on companies in line for investment from the new fund, but discussions are underway with a number of companies, including some in the medical device area.

Among the backers of the new fund are British Patient Capital, a subsidiary of the government-owned British Business Bank, and Germany’s public health insurer Barmer.