Crowdfunding: Fuelling EU biotech
EuroBiotech_Your recent Bionure campaign raised more than €1m with the support of over 250 investors. Has crowd-investing developed into an established tool for Spanish biotech companies?
Daniel Oliver_ The market is far more mature than a couple of years ago when we have started with Capital Cell. There are many more people now who have already invested. When we started our first few campaigns, 98% of our investors had never invested in a company before. Now, we have a richer ecosystem of people who are not afraid to invest in health or even in drug development or biotech. Bionure has been our largest campaign and, I think, probably in health also in Southern Europe.
EuroBiotech_What sort of investors did you attract in Spain?
Daniel Oliver_ Spain is not very known for risk investments, but with our platform, we mobilised capital through different kinds of investors. I would say 40% of those who are investing in Capital Cell projects are somehow related to the health environment. That can be C-Levels at biotech or pharma companies, academic researchers, nurses, regulatory consultants – people who already know the market. In Spain, we have had up to 30% of cross boarder investments from 25 different countries. However, it is not particularly easy. If you want to invest in a Spanish campaign, you physically have to go to the embassy and obtain special documents that you can’t get online. We are still far from a unified legislation.
EuroBiotech_Do you follow up with your projects when they have ended?
Daniel Oliver_ We don’t really get involved in companies once they are done funding, as the financial security in Spain would not permit us to keep up. We deal with a lot of small investors. We prefer for them to be aggregated through one vehicle, so that they can consolidate their power together.
EuroBiotech_Why did you move to the UK and how did you manage the international expansion?
Daniel Oliver_ The UK makes a lot of sense from a business perspective. It is a huge financial market and has one of the most booming biotech communities in the world. Capital Cell is now a British and a Spanish company. All together, we have 12 employees. In Spain, we work like a service hub. We do project analysis, finance, and marketing. The office in the UK provides business development and compliance. During our expansion, we got help from the European Commission. I am a member of the European Equity Crowdfunding Association and the European Crowdfunding Stakeholder
Forum, so I was quite familiar with the legislation in the UK and Europe.
EuroBiotech_How many campaigns are you running in the UK right now?
Daniel Oliver_ We just launched at the end of May, and we have an agreement with Angels in MedCity, one of the largest invest-groups in the UK specialising in health. Currently, there are five companies’ campaigns that we are running. For example, there is a cancer treatment company (Combat Medical), another company developing therapeutics for inflammation (Ducentis Biotherapeutics), and an Israeli company that is trying to find a biologic solution for mosquito-
vectored disease (Forrest Innovations). We expect to launch another 12 campaigns this year, including a Spanish company specialising in data analysis. We have also been in discussions with companies from Germany, Norway, and Ireland. This is one reason why we chose the UK, because it is a very active financial market and companies across all Europe are happy to raise money in the UK.
EuroBiotech_What are the main differences between the crowdfunding scenes in the UK and in Spain?
Daniel Oliver_ What we see in the UK is that scientific companies are much more prepared in the business and financial sense. It is easier to find lead investors who organise the operations. The UK is not just a more powerful market, it is also a more demanding one. If you want to raise money in the UK, you need to proof that you have a outstanding product, a global range, and that you have a world class team, and so on. In both countries, life sciences are equally challenging and fascinating.
EuroBiotech_What about Brexit? Wouldn’t it be easier to stick to countries who will stay in the European Union?
Daniel Oliver_ Maybe. But even if the UK had never been in the European Union, we would still have moved there. Alternative financing in the UK is four times higher than in all the other countries in Europe combined. The average investment in Spain is €1.08 Euro, in the UK it is €65, both per person. Furthermore, when we were looking around, we saw that the UK legislation on crowdfunding is probably the most open and the most forward. Every other country in Europe is very restrictive when it comes to financial regulations. Equity crowdfunding particularly requires looser financial regulations, needing them to be kinder and more open to a lot of things like online signature for example.
EuroBiotech_There are a few generalist and life sciences specialised platforms operating in more than one European country. Does crowdfunding exist on a European level?
Daniel Oliver_ I wouldn’t say no. The problem with equity crowdfunding is that it is not regulated in all European countries or in one legislation. Yet, there are networks like the European Crowdfunding Stakeholder Forum, for example. It is a group of 50 people from across the European Union which the European Commission has put together to consult with regarding the creation of future European crowdfunding legislations. It is very difficult to internationalise crowdfunding activities. Only a few generalist platforms are active in more countries, like “Invesdor” from Finland or “crowdcube” from the UK. I am afraid that the prospect of a European-wide equity crowdfunding structure is, at present, a bit too optimistic. Maybe give it two or three more years.