BioBiz Buzz

16. The Smart Money Talks: Inside Sofinnova's Bold €650M Fundraise

• https://biobizbuzz.com/ • Season 1 • Episode 16

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In a fundraising environment marked by cautious institutional investors, tightening belts, and widespread scepticism about early-stage venture capital, Sofinnova Partners has just closed its flagship Capital XI fund at €650 million, significantly exceeding its initial target of €500 million. What does this signal about the state of healthcare innovation funding in 2025?

In this episode of BioBiz Buzz, your host Mike Ward sits down with Antoine Papiernik, Managing Partner and Chairman of Sofinnova Partners, to unpack one of the most significant European life sciences venture capital announcements of the year.

Together, they explore why leading pharma companies, sovereign wealth funds, and top-tier institutional investors are doubling down on early-stage biotech and medtech when the broader VC market is under pressure. 

Moreover, they discuss Sofinnova's disciplined, science-driven investment strategy, the geographic and therapeutic opportunities driving Capital XI deployments, and what the €1.5 billion raised across Sofinnova's platform over the past year reveals about institutional confidence in healthcare innovation.

More importantly, what does Sofinnova's oversubscription mean for the future of early-stage healthcare ventures as they head into 2026?

Whether you're an entrepreneur seeking funding, an industry strategist tracking market dynamics, or an investor evaluating the early-stage healthcare landscape, this conversation provides critical insights into where the smart money is being invested and why. 

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SPEAKER_00:

Hello and welcome to BioBiz Buzz, the podcast where we talk strategy, science, and the business of bringing breakthrough healthcare innovations to patients worldwide. I'm your host, Mike Ward. In this episode, we're going to be diving into one of the most significant fundraising announcements in the European Life Science Ventures Capital this year. Toffinova Partners has just closed its latest flagship fund, Capital 11, at 650 million euros. That's at almost 765 million dollars. And it's a number that actually, you know, I understand has significantly exceeded its initial target. Now, in a volatile fundraising environment where many VCs are actually tightening their belts, this is clearly a bold statement. It signals something important about the market, about early stage healthcare innovation, and about where the smart money is actually placing its bets heading into what it's going to be the rest of the decade. To unpack what this means, not just for Sofinova, but for actually the entire early stage biotech and medtech ecosystem, I'm thrilled to welcome Antoine Papinik, the managing partner and chairman of Sofinova Partners. So, Antoine, welcome to BioBiz Buzz. Thank you very much, Mike, and so happy to be with you today. That's great. So let's start with the elephant in the rune. 650 million euros. Now that's a significant fund in any market, but especially now. So when you set out to raise Capital 11, what was actually that initial target? And what does it mean that you've actually exceeded it?

SPEAKER_01:

So our target was 500 million, and the cap, you know, Ps always asked for a cap maximum raise was 600. So we clearly were able to go above the target. And we are so happy about this. I mean, it is a difficult environment. I can't tell you that this is easy to do, but I think there's a lot of silver linings for ourselves, but also for the market to be in this position. It means that what we do matters, that people understand that investing in the next generation of life science companies in Europe matters and that they think that, okay, uh Sophie Nova is a good shop in which to uh place their bets in order to get this done.

SPEAKER_00:

Yeah, but I mean, it sort of really jumps out. I mean, the conversations that I've had at sort of the industry conferences is that this is a volatile fundraising environment that we're in at the moment. Other VTs, they talk about the headwinds, higher interest rates, pullback in some sectors, cautious LPs. Yet you've attracted investors from a sort of a whole array of different groups, whether it's often wealth funds, major pharma companies, corporate family offices, etc., and across across the globe. So what's your read on why these sophisticated institutional investors are actually still willing to back early stage healthcare with the conviction that you guys have have achieved the fact that you start off at 500 and you've ended up even exceeding the cap to 650?

SPEAKER_01:

Well, so first of all, you mentioned volatile for the market. Volatile is a is a euphemism. It is tough out there, clearly, at every level. Just getting a meeting with an LP is tough. If you have not brought back money to that LP, they just don't take the meeting. So it's not volatile, it is super hard. It's just the reality, and everyone is in the same situation. It's not that it was a breeze for us at all. You need to have huge conviction in what you do. You need to demonstrate that you have the ability and that you show the ability to return money back to this investor. But more broadly, I think investors probably have less money and they're less prone to taking risks in general across the board. So therefore, you need to demonstrate that, well, early stage investments in our field will have an ability to generate the returns within a reasonable period of time. And obviously, we were able to demonstrate this from a topology of investors. You mentioned them. I think it is interesting to see that we got an increased number of sovereigns in the makeup of our key base. Uh, first of all, you have to start there. 80% of the investors that came to the fund are repeat investors. So you need to be able to have your investors deciding to go with you. That's the first thing. If they don't, that's a real issue. Thanks to that, we were able to convince 20% of new investors to come in the fund. But that dynamic is super important. If you don't get that balance, then you are in a more difficult situation. So we were able to convince them, because we had brought money back to them before, that the next period is in fact an amazing period. And in particular, we think for Europe, with all the things that we've learned, with all the experience we've accumulated, we think that this moment in time, for a number of reasons we can get into that, of course, you and your audience know perfectly, linked to how healthcare innovation cohabits with other industries in other sectors, I think justifies the fact that, yeah, investors want to commit to the fund. And as I said, with less money, they need to maybe invest in less funds. So indeed they might be the haves and the have-nots, because uh they have to take harsh decisions, like we do as investors ourselves in some of our portfolio companies. All our kids are beautiful, but some of them, you know, maybe deserve funding more than others. This is what investors are doing. They're being more discriminant, but the money, some money is still there. You just need to do the effort of conviction in order to go and get them to take their checkbook out.

unknown:

Yeah.

SPEAKER_00:

So, I mean, you mentioned the fact that it's difficult to go to LPC if you haven't returned your money in the past. So when you sort of started originally trying to raise 500 million euros, what was in fact the reception, knowing that you sort of said it's super hard? Were you surprised by the reception you were getting?

SPEAKER_01:

Well, as I told you, getting the meetings is difficult enough. They're super busy, they are overstretched LPs in general. You need to, and you need to find ways to explain to them why they should take the meeting. So that that and the reception for my existing was warm enough that we got into a discussion as to okay, do you want to do this? What's the timeline? How much would you like to invest? Often less than they did last time around in for some of them who don't have the the same amount of uh of uh of dried powder to invest in in our sector. But reception was, you know, it's not like they they said, oh my god, absolutely I'm gonna do that tomorrow. You know, this this is not the reception you get. I don't think anybody gets this type of reception. You just need to convince, but it's not just about life science. You know, it's like investors are are looking at everything. And if you think about competition of AI, anything AI, and they said, you know, how do you compete with that? You know, this is the rocket on one end, and then you know, what are you? You are uh a Renault 5. Is that what it is? And you need to explain to them absolutely not. What we do is uh, you know, and we have the demonstration now at Sofie Nova that what we do consistently will bring returns to investors as long as you do things, you know, the proper way, and we try to tell them we do things the proper way. So that that was how we convinced them.

SPEAKER_00:

So was there any particular piece of messaging that really landed that actually got a deal over the line for you?

SPEAKER_01:

I think it's a combination of things, small patches that make the the picture, and uh start with a team. You know, we we have a very uh the capital team, which is made of six partners, is a very experienced team. And uh every single one has been in a business for uh you know many years. And uh we brought in two more partners into this fund. So we have now six partners, six nationalities. So, you know, the international nature of the Sophie Nova team, if you think about it, you know, we have Maina, who's who's British, Ada who's who's Greek, Henrietta who's Danish, Graziano, who's Italian, Carl, who's German, and me, French guy, in the team, six different teams, three men, three women who have collectively done so much in the in the industry over the years, the good, the bad. I wouldn't say the third one, but certainly have built experience in the field. So I think the team, uh, you know, you you want to have a repeat team that knows what they're doing. It's exactly what we do when we invest in companies. You you you'd rather have someone who has experience, who's got scars on on his or her body, so that they, you know, make new mistakes, not old ones. This is the same for venture. So I think the team, I think, is an essential part of what we offer. You know, it's like we've been there, we've been there through, for some of us, 2001, 2008, you know, through COVID, et cetera. We we know what happens when things don't go straight, uh, but we also know what happens when you get it right. And I think this is one of the things. So I think team first. And then there is other things that you could say are marginal, but we pitched our Sofinova AI platform called SOFIA to every investor. And I have to say, I'm really glad to see how they reacted to it because everyone in our business, you know, we know it's a relationship business. We know we need to be close to the entrepreneurs and ideally repeat entrepreneurs. And this is how ultimately success happens. But at the same time, particularly in a European setting, finding the diamonds in the rough is a super difficult thing to do. And Sophia, our super duper analyst, basically more than analyst in many ways, is able to help us in ways that is extraordinary compared to what we thought it would do. And I think it's proprietary in nature. It leverages the tens of thousands of deals that we've done over the past, you know, the relationships. I mean, the discussions with the FDA, discussions with uh reimbursement, uh, the payers, that all these things collected at Sophie Nova, plus all the tentacles that this has to the outside world. So I can't say we cannot demonstrate today, well, you know, we've done those deals and that generated three billion in value, but we can certainly demonstrate that we are living with our times. That you cannot think that any business, and certainly not the venture business, will not be revolutionized by AI. The question is where, how? And because we started six years ago, you know, maybe we have a small advance compared to others, and something that certainly what we are convinced is that Chad GPT cannot do what Sophia does. And therefore, you know, we think that's that's an edge. You know, how much of an edge? Difficult to quantify, but for sure, LP's thought, okay, you know, those guys they look at things not in the back mirror, they're looking at things forward. And maybe if you have exactly the same in two teams and you have one that is looking at the world maybe more prospectively, then you want to put your money there.

SPEAKER_00:

Yeah, and I guess, I mean, like in high performance sports, you know, those incremental margins of differentiation make all the difference between winning the gold medal and finishing last in the race. So I guess Sophia is probably not only your super analyst, but maybe your secret weapon in these cases. But let's talk actually what Capital 11 is going to actually be funding. I mean, the press release mentions uh pioneering biopharmaceutical and med tech companies addressing urgent unmet clinical needs. Now, that's almost like any press release I'm going to see from a VC is going to be sort of saying that. I mean, it's a mission statement. So can you actually sort of give us a sense of what you're going to be investing in? Where are you seeing the most compelling opportunities right now?

SPEAKER_01:

Well, poof is always in the pudding. So we we have actually started and made five investments in the last six months or so. And I can tell you what those are because you know that tells you exactly what we're going to do. So you have Elivara in the UK. I think it was announced uh just a few weeks back, which is inflammation immunology. If you think about one sector that is booming, clearly this is that sector, and uh rheumatoid arthritis and other indications. I think that's a good example of what we have just done and will do. You've got Actifera in Norway, so radiopharmaceuticals, next gen radiopharmaceuticals. We think that oncology is still a big field. You know, like a few years back, people thought, well, oncology, because of immunotherapy, it's so complicated. We need to do head-to-head. It's just too complex and people going away. I don't think so clearly now, you you've seen from the last oncology meetings great news coming out and great new treatments for indications still of great unmet need. So I think oncology is here to say people die, unfortunately, around us of cancer. And I think we are investing. In fact, we've made two investments in oncology, actithheride radio pharmaceuticals. And Norway has some lettres de noblesse, as you say, in radio pharmaceuticals, having just developed uh what was likely the first commercial product in the field. The second one is actually a device company called Galvanize, it's a US deal. And the CEO of the company is Doug Gotcha, who was our CEO already for Shockway, which was a massive win for us, uh, sold to GNJ for$13 billion. So repeat entrepreneur oncology, it's it's a new uh energy uh pulse electric field to treat uh sorry tumors, and you know, in particular in the lungs, which is a very difficult place to treat them. So that's oncology. We have cardiovascular with higher in Switzerland, RNA platform uh looking at, in particular, chronic obstructive cardiomyopathy, so very important. I think cardiometabolic is a big theme in general, and then you have nanophoria in Italy looking at a delivery platform through the nose. So you just look at this: four European, one US, two oncology, inflammation and immunology, and cardiovascular. That's where the the one missing here is CNS. I would say if you think about the four pillars, and you know, of course, we think there's a lot of opportunities in CNS that uh that we will pursue. So we don't think there's a a problem with the deal flow. There's a huge amount of quality companies out there that are indeed doing what is said in the statement, revolutionizing the next generation of medicine. And you know, the the first five just gives you a sense of what we're gonna be doing.

SPEAKER_00:

So at the moment, it's sort of 80% European, 20% US. Do you have a sort of a vision of what sort of the geographic spread is likely to be as you you invest out of this fund?

SPEAKER_01:

Yeah, what we sell is 70% Europe, 30% US. This is what we've sold for the last, you know, as long as I can remember for the capital fund. So because what we sell is is Europe. Well, our makeup is Europe. What we uh know, uh the relationship that we have is Europe, but we've been pretty good in the US too. And we also believe that in order to be good in Europe, you need to know what's going on in the US, you need to practice the US first hand. And we will continue to do that exactly for Fun 11.

SPEAKER_00:

Right. And if I was an entrepreneur and I was coming to you, what would I have to do to first pique your interest? And then what do I actually have to show you in terms of you know validation, etc., to actually make you really want to sort of do the due diligence on what I'm proposing?

SPEAKER_01:

You know, it's uh it's a difficult thing to know exactly what works and what doesn't in in this chemistry of the relationship with an entrepreneur that comes to see you. But already, you know, we don't see every entrepreneur. So we have other ways, other KPIs to try and see how we how how we select those that we will see. In general, if you're a repeat entrepreneur of our own portfolio, that's simple. You're gonna get the meeting for sure, and we're gonna be very happy. In fact, we're gonna be chasing you to meet for your next gig. You know, the the perfect example in Ireland is, of course, Mark de Gaidell. If you think, you know, he he was uh the CEO of Corvidia, Soto Novo, he was the CEO of Syncor, so the Vastra, and now he's the CEO of Abilags and doing miracles there. So if he calls one day for his fourth company, what do you think we're gonna do? Of course. In fact, we're gonna go for coffee because it happens to be in the same building as uh a Soci Nova one-level down. So if you're not a repeat entrepreneur, either from our own team or or outside, then you need to surround yourself with others that are the touch points that we will react to. If you have the right advisors, the right advisory boards, the right board, the right connections that know us, that you know, the friends of my friends are my friends. It's it's not much more complicated than that. So even if you're a newbie, you're just out with a new project, surrounding yourself with the people who have the track record and who mean something for the adventure community, this is not rocket science. You can orchestrate this in order to meet. Of course, your science needs to pan out, but this is something that we will be able to evaluate. From a stage perspective, I would say, you know, nowadays it's very difficult to invest when you don't have a crisp view uh as to when this therapy is going to have clinical proof of concept. Because at the end of the day, we know that in the eye of the beholder, the buyers, and I'm not talking about public markets yet, but I'm talking about the pharma, of course. Then, you know, proof I was saying is in the pudding. Well, for the farmer, for sure, show me the data. So if you are able to show me the data in not 10 years, show me the data in three years. So it means that we need to see that wherever you are, you may be pre-clinical. Okay, but you know, doing things right, you should be able to have ideally in 24 months, 36 months, the proof of concept that what you are promising actually either works or doesn't work. And that I think time to that readout is a very important thing. And I think we are more crisp today in our investment strategy on where is it that that we can intervene. If it's a super early pre-clinical project, that's what needs to happen. Of course, we do also spin-outs. We have a huge tradition of doing spin-outs from pharmaceutical. So, you know, we've done spin outs in every fund, and that's a different makeup where we look at assets. Sometimes they come with entrepreneurs, sometimes they don't, and we need to bring entrepreneurs and assets together. So that's a different thing. But that's something that the capital fund is uh has always done and will continue to do.

SPEAKER_00:

Right. But I mean, in your statement, you do say that you're going to double down on early stage opportunities. So again, sort of just trying to get a sort of sense of what does that mean?

SPEAKER_01:

Yeah, so double down in a in a mathematical sense. If you think about you know, fund nine was 333, fund 10 was 472, but fund nine, which is like contemporary, because we have a lot of companies from fund nine, it's 333. We have literally, you know, we're doubling down on on that, meaning that we can ultimately invest twice as much in those companies that we were able to. That's a huge positive thing for those companies. Any company that comes in now, we hopefully, and you know how critical this is in this current environment. If if your existing, you know, what I was telling about the LPs is the same here. If your existing can't reinvest, the companies are in dire straits. So here, having 650 million, more money than we've ever had for this strategy, it is doubling down. You know, I started, sorry to remind everyone how old I am, but I started in Capital II. That was a 47 million euro fund. We made miracles with 47 million euro. You think about it, just look at it positively. The the glass is not half full, the glass is three-quarters full or 80% full. We are able to invest 650 million euros in a new set of companies. And one thing that I didn't mention, of course, this is within a fundraise at Sofie Nova of 1.5 billion over the last 12 months. I mean, I have never seen this in my lifetime at Sofie Nova. It's the first time ever, and I hope not the last, that we are able to raise 1.5 billion in this period to fund from super duper early stage. And you may remember that we have announced the final close of our biotech accelerator, a Biovelochita at 175 million, again above the cap. If you compare this seed fund of 175 to what was the flexible fund of 47 million euro back when I joined in 97, 98, we should be happy about this. So we have uh, and if if we're gonna invest in maybe, I don't know, 15 to 18 companies in fund Capital 11, overall, this 1.5 billion are gonna be deployed in, say, 50 companies. So there are 50 companies, mostly in Europe, will benefit from this uh dry powder, which I think is super exciting for us and hopefully is a positive thing for the ecosystem.

SPEAKER_00:

So you mentioned how you've raised 1.5 billion euros. So I'm just wondering what does that tell us about the sort of the state of healthcare innovation in 2025 heading into 2026? And what do you think is still gonna keep VCs awake at night in the coming year or so?

SPEAKER_01:

Well, yeah, 25, we didn't sleep much. Uh, I will I will tell you that. But this 1.5 for us tells us that you know there's a huge potential for Europe life science across the board from early to late. It is on us to show that. I think you know, the the deglobalization, what's going on in the US, what's going on in China, means that we have to get our act together just to figure out how best do we play that. It's a different setup than 10 years ago. It's a different setup than 20 years ago. You need to look at this 26-36. How are you going to do this? And, you know, starting with money is, of course, a positive position, although I would say a high-class uh position to be in. But it remains that where you put those beds is super important. You know, uh, of course, MFN tariffs, all of this have kept us all, farmer, of course, including uh awake at night in the last six months. I think now this has slightly come down in the sense that we sort of know much better where where we land. And my optimistic self is thinking look, there must be a premium to innovation. If you are a farmer with the existential need to buy the next thing, just look at it. Just look at the Metsera. We were not part of the Metsera deal, but look at how beautiful. Something that was worth$5 billion on Monday is worth 10 billion on Friday. How cool is this? This is amazing. It just tells you that there must be a premium to innovation, and then the farmer understands that, of course, they don't want to pay the right price for it, that they could, you know, be pushed if they really want it. And I think that that's a positive thing. So outside of MFN, outside of tariffs, outside of uh the deglobalization and the complexities, if you develop a drug, whether it is for mash or for cancer, for a CNS indication, you bring data that demonstrate the benefit to patients, ultimately there is a need for it. Pharma is ready to pay infinite PE multiples, because that's what it is. Infinite in a mathematical sense, PE multiples, to get access to this drug. We should relish on that. We should work hard on finding those companies that I can deserve this, and then uh yeah, um think that uh the worst is absolutely not certain, and we will uh we will be able to generate major companies over the next decade. This is our ambition for sure.

SPEAKER_00:

Yeah, I think that's a great positive note on which to end our conversation. So, Antoine, thanks very much for for sharing your thoughts. Congratulations on the fundraise and good luck with Capital Eleven. So, thanks very much. Thank you very much, Mike. Thanks for inviting me and uh looking forward to see you soon. Great. Take care. Cheers. Bye bye. Bye for our listeners. You can learn more about Stoff Innova Partners and their portfolio if you if you go to their website. If you've enjoyed this conversation, please subscribe to BioBizBuzz, leave a review and share this episode with colleagues who also care about the business of healthcare innovation. I'm Mike Hord. This has been BioBiz Buzz. Thanks for listening.