Dutch-headquartered venture builder NLC has announced a first close of €20m for its new health impact fund, from which it will invest in 40 startups, both new investments and follow-on. It's targeting a final close of €100m.
NLC isn't a normal healthtech VC. It has an 80-strong team responsible for tracking down patents at universities across Europe and then helping cofound startups based on those patents. The team sources an external cofounder and backs the new companies with both capital and support for potentially years, until they have a product ready for market. They work across biotech, medtech, green health and digital health.
“We want to get out as fast as possible, and we stay as long as needed. And as long as needed means [up to] 10 years,” NLC’s CEO and founder Bert-Arjan Millenaar says.
From patent to exit
According to NLC there's a huge funding gap that stops patents becoming successful companies, with 95% of all healthtech inventions never reaching the market. In Europe alone, there were almost 24k patent applications for medical technology and biotechnology filed with the European Patent Office in 2022. More than 40% of the patents filed to the office are made in Europe.
The healthtech market is more difficult than others too, according to Millenaar, especially when it comes to funding.
“The problem is we only have 10% of early-stage capital in Europe and the VC funds have in the last few years grown so big that they have drifted away from innovation,” he says. “At the early stage of innovation, you don’t need €1m-5m, you may need €100k-500k and help to build the business.”
NLC works with more than 40 universities and research hospitals across Europe, including Amsterdam University, Berlin's Charité Medical University Hospital and Oxford University, to help commercialise patents emerging from the institution's researchers, either with the university or the scientist depending on the country.
NLC's patent-hunting team works closely with universities and searches through medical journals.
“We have algorithms on medical publications and patents, but I think most important is the account managers [working with the universities]. So we have a strong relationship with academic centres,” Millenaar says.
NLC becomes a cofounder and stays with the company until it's ready for venture capital or another large investor to come in. Since it began in 2015, it has co-built and invested in 100 healthtech startups across Europe, including Dutch Nicolab and UK-based Pep Health.
The NLC Impact Health Fund
NLC’s impact health fund is its fourth fund, and by far the biggest — the previous three combined are smaller than the first €20m first close. The first tranche was mostly from healthtech entrepreneurs, but the second close is expected in September where institutional and government investors will also be involved.
Capital from the first close will be deployed immediately into 40 startups. Some of those deals will be new, and some will be follow-ons.
And although NLC doesn’t have a lot of exits yet (eight partial exits and one full), Millenaar says that the expenses of running NLC as well as the investments it did between 2016-18 have been returned and that he expects a multiple of 40 for its previous funds when all's said and done.
“Healthtech is a growing market and it will remain growing. There's a massive opportunity and we have a unique model. So far we managed rather well to attract investors,” he says.