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A New Era in European Life Sciences Investment


Investments setting up sector for future success that could one day rival its US counterpart.

Jack O’Meara

Jack O’Meara

Europe (including the UK for purposes of this article) produces twice the number of scientific publications compared to the US and three times that of China. It also leads in terms of quality, as measured by the number of citations for its publications. The region is also home to 43 of the global top 100 life sciences universities, while the US has 34, and produces thousands of high-value patents each year (see Figure 1 below).

Despite this, life sciences funding in Europe is still just a fraction of that received by US startups, and its share of total venture capital dollars remains on the decline, 24%, 22%, and 21% over the past three years,¹ with earlier stages particularly lacking, though growth capital shows signs of maturing.2

Figure 1.

Figure 1.

Interestingly, this is in stark contrast to what is being seen in Europe’s tech ecosystem3 over the past three to five years. Technology investing in Europe has seen something of a renaissance in the past five years, with European tech venture investment at $113 billion in 2021, up 135% from 2020, similar to the US in 2019.

European IPOs raised $105 billion in 2021, up 780% from 2020, nearly double what the US raised in 20192. Several brand-name US funds are reopening European offices (Sequoia, General Catalyst, etc). Europe is approaching par with the US at a rate no analyst predicted.

I believe this largely relates to a cultural shift in Europe around entrepreneurship, which has unlocked a wave of talent in this sector, spurred by a proliferation of accelerators and breakout success stories such as Spotify, Wise, and Monzo. Success begets momentum. Irrespective of the cause, I believe we will soon see a similar acceleration in biotech.

There are some key ingredients in order for Europe to lead the next wave of biotech innovation. Beyond Europe's global leadership in fundamental science, which is in contrast to the technology sector, where US universities lead, Europe is home to a key component of scaling growth companies: executive talent from pharma. Novartis, Roche, Bayer, Novo Nordisk, AstraZeneca, Sanofi, GSK, and many other leading pharmaceutical companies are all headquartered in Europe, with most of these companies founded in centuries past. Well-trained talent to scale nascent biotech companies is local and is increasingly interested in joining early stage companies—having seen several $1 billion-plus exits in recent years (GW by Jazz Pharma, Kymab by Sanofi, Exscientia's $3 billion IPO, etc).

Scientific culture and ambition is shifting in Europe

Many have speculated that what has held back European biotech in the past was a lack of ambition. But Silicon Valley is a mindset,1 and I strongly believe this is changing. More than ever, an increasing number of biotech companies are starting across the continent, particularly in the UK. UK companies accounted for 60% of the total biotech venture capital invested in Europe last year, which was itself a 60% increase, to $5.6 billion, from 2020 to 2021. There are currently 3,456 companies in Great Britain involved in biotech research and development, up about 75% from three years ago, with initiatives like Nucleate UK and BIA PULSE feeding a fledgling pipeline. I think there’s a real model for matching Silicon Valley-esque entrepreneurs with European scientists.

Fresh funds are launching regularly to compete for attracting top-tier biotech startups to their portfolios, for example, Mubadala’s4 $1.25 billion bet on UK life sciences. This huge expansion of the venture market is largely driven by the arrival of fast-moving, deep-pocketed US investors in force.

Further, while early stage funding is picking up, growth capital shows signs of maturing. European biotechs now rival the US and China in the average value of large (greater than $100 million) late-stage funding. And European biotechs listed on the US stock markets are close behind their US peers in mean IPO size ($153 million compared with $159 million). When it comes to raising follow-on rounds in the US, European biotechs perform better than US biotechs on average but have a lower total funding amount.

If you were to take lab space as a metric, there are soon to be five brand-new science/research parks being developed in Oxford, England, above the current three primary centers in existence. Further, government incentives such as the UK’s R&D tax credit (read “cash injection”) gives research-stage companies between 16% and 33% of their R&D expenses back each year, significantly elongating company runways in Europe. To borrow a phrase from our California colleagues at a16z, biotech is (now) eating the world, akin to software at the beginning of the millennium, and this time Europe is going to have a seat at the table.

Europe played a foundational role in the science that gave birth to the biotech industry, as well as a pivotal role in response to the COVID-19 crisis more recently, which highlighted the need to keep on innovating in the life sciences sector for patients. It’s been shown that investing in European life sciences companies in their early development stages generates a lot of value for investors with long-term strategies.

For all the reasons laid out here, I believe we’re witnessing a new era where European life sciences investment could one day rival its counterpart in the US. The sector is set to flourish, to fuel more scientific innovation, and impact the lives of many more patients around the world.

Jack O’Meara, CEO & Co-Founder, Ochre Bio


  1. https://www.svb.com/trends-insights/reports/healthcare-investments-and-exits-c
  2. https://www.mckinsey.com/industries/life-sciences/our-insights/can-european-biotechs-achieve-greater-scale-in-a-fragmented-landscape
  3. https://www.economist.com/leaders/2021/11/27/adventure-capitalism
  4. https://www.gov.uk/government/news/uae-and-uk-launch-sovereign-investment-partnership-with-initial-1-billion-in-life-sciences
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