Pharmaceutical giant Sanofi has agreed to inject more than $750 million into its corporate ventures arm to increase its investment capacity.
With this Evergreen Fund, Sanofi Ventures will use its capital for early-stage investments in biotechnology and digital health start-ups of strategic interest to its parent company. The company is also looking to expand its team, which currently consists of nine members, according to its website.
Sanofi Ventures has increased its investments over the past few years. In 2022, the company made his second-most deals, backing 10 rounds worth a total of $799.9 million, according to PitchBook data.
Its portfolio companies include gene medicine company ReCode Therapeutics and drug discovery startup OMass Therapeutics. Since its inception in 2001, 80% of his investments have gone to biotherapeutics and 20% to digital health companies.
This increase in capital will be welcome news for the pharmaceutical and biotech start-up industry, where venture activity has returned to pre-2020 levels due to the venture slowdown.
According to PitchBook data, $46.1 billion will be invested in 2,438 deals worldwide in 2022, compared to 3,284 rounds totaling $72.7 billion in the previous year. As of 2023, $1.5 billion in VC funding has been put into his 58 companies.
The slowdown in investment is part of a broader setback in VC activity, but also a result of overenthusiasm at the height of the pandemic. VC firms flocked to the industry in 2020 and 2021 as COVID-19 highlighted biotech’s future importance and attractive return potential. A flood of new investors boosted valuations, and many took advantage of his attractive IPO market to go public, only to see market capitalization shrink after going public.
Unlike software companies, biotech start-ups can take decades to deliver results, face tougher regulatory approvals, and the cost of funding research and clinical trials. . While many consider the industry recession-proof, biotech can seem like a risky bet now that investors are more cautious with capital.
Corporate venture arms such as Sanofi Ventures may become more attractive in the recession for biotech and pharmaceutical start-ups. In addition to providing a source of funding, our expertise in areas such as drug development, regulation, manufacturing and marketing favor companies that utilize corporate capital.
Featured image of a researcher working in Sanofi’s oncology lab by Thomas Samson/Getty Images