After a successful last year in which Sanofi Ventures made its second-highest number of deals, 10 rounds of backing that amount to approximately $800 million, its parent company, the pharmaceutical giant Sanofi, will now be bolstering $750 million into the corporate venture with the intention of strengthening the firm’s investment abilities.
The company’s intent is to use the capital to invest in digital health startups and biotechs that are of strategic interest to the company. While the current Sanofi Venture team stands at only 9 members, with the help of the evergreen finding the firm will also expand its team.
About the start of this new phase of investing in biotech investing, the CEO of the french drug company, Paul Hudson said, “As we continue to build our best-in-class pipeline, we are investing in early-stage companies that share our ambition of delivering transformative science and digital innovation, this capital commitment signals Sanofi’s accelerated ambitions in the venture capital community and our continued desire to collaborate with global innovators in the best interests of patients.”
Not only will Sanofi Ventures be providing a source of funding to startups but it will also share its expertise in areas such as drug development, regulation, manufacturing, and marketing with those on the receiving end of its corporate capital.
The company can trace its roots back to the formation of Sanofi-Genzyme BioVentures in 2011 and even before that, a decade prior to when Genzyme Ventures was established. Since the company’s inception in 2001, 20 of all investments have gone to digital health companies and 80% to biotherapeutics.
Although venture downturns across the board have fallen from 3,284 rounds totaling $72.7 billion in 2021 to $46.1 billion invested across 2,438 deals globally in 2022, Sanofi was able to finance rounds at companies such as streptococcus vaccine developer Minervax, neurosensory-inflammatory player Escient Pharmaceuticals and immune disease startup Matchpoint Therapeutics.
Investors have bet $1.5 billion on approximately 60 companies in 2023 thus far. Not only this but, the firm will also be co-leading an investment in immuno-oncology startup NextPoint Therapeutics. NextPoint will be joining the company’s existing portfolio of bluebird bio, Ultragenyx, and drug discovery startup OMass Therapeutics. ReCode Therapeutics is also part of the company’s portfolio.
At the heart of the pandemic, from 2020-2021 venture capital firms flocked to the biotech industry with the expectation that it will yield attractive returns. This influx of investors, however, only ended up pushing valuations that led to firms making their IPOs public. This led to firms’ market caps shrinking and inevitably, this slowed won overall investment in the industry.
Since it is not possible for biotech startups to produce immediate results like software companies, the industry cannot be considered recession-proof. Especially since investors are becoming stringy with their capital, biotech is no longer considered a safe bet since there are heavy research and clinical trial costs as well as long-stretched regulatory approvals.