Marta-Gaia Zanchi (Nina Capital): “This year we will see lower investment in health technology concentrated in fewer deals”

Biomedical Engineer (Politecnica di Milano) and Ph.D. in Electronical Engineering (Stanford University), Marta-Gaia Zanchi has held roles with vastly different organizations in Europe, Canada and the United States. From 2006 to 2019 she worked with entrepreneurs, investors, universities, and corporations in Silicon Valley, where she was the Founder and Director of Digital Health at the Stanford Byers Center of Biodesign. Last year, Dr. Zanchi moved back to Europe and settled in Barcelona, where she currently works as the founder and managing partner of Nina Capital.

Are you seeing a change in the projects that come to you looking for funding?

We see no change in dealflow volume, quality, stage, and geographical diversity, with this exception: we see a disproportionately higher number of companies coming to us that have changed their Series A target, and raising bridge funding. Approximately 68% of our quarterly dealflow (~200 companies) was from these regions: Switzerland, Germany, Ireland, UK, Nordic countries (Sweden mostly), Spain, and the United States, in order of highest to lowest number of companies. Keep in mind that we generate internally most of our dealflow (inbound from Nina Capital platform), and only a small portion (<10%) is unsolicited inflow.

How do you expect this crisis to affect your ability to put together funds?       

We were lucky to be almost fully subscribed as of early March, and we had already stopped actively fundraising. We know many other emerging fund managers who are reducing targets or postponing a first closing, especially Micro VCs (the limited partnership base for many Micro VCs include FOs and HNIs most impacted by the pandemic). Sometimes, you can't take credit - it's just down to good timing. Regarding co-investment, we are investors in eight companies representing seven European countries and the United States. We have co-invested with other VC funds across Europe and the United States, including the Boston area and the San Francisco Bay Area. It's a mix:  sometimes our friends in venture capital send us deals (~10% of our dealflow), most times we try to connect teams we discover with investors whom we also like to work with.
 

How is this pandemic already affecting your day-to-day work?

We have a core team in Barcelona but many of our interns, fellows, and almost all our advisors and venture partners are spread over two continents. We have always worked collaboratively and remotely, leveraging a cloud technology stack supporting all our operations and data management. So, we just kept doing that, and March-April were as busy as ever, actually more because we have spent significant time trying to help our portfolio companies assess impact and adjust plans (thankfully we are a new firm with only 8 investments so we were able to spend significant time with each one). Most venture capital teams changed the allocation of their investment team meetings from discussing 5 new deals and 1 portfolio company, to discussing 5 portfolio companies and 1 new deal (if at all), but most of the firms we collaborate with are still making new investments. Some suppliers and especially notaries cannot make an easy transition to this type of fully remote work, so, yes we've seen some slow down there. 

In the middle and long term, what changes do you think there will be in terms of investment in the sector?

For the rest of the year, we will see lower total amount of investment in health technology concentrated in fewer deals; part because there'll be less capital, period, part because some firms especially the largest and most active are not very active right now; next year, I wonder if we will see a redistribution of capital from other sectors which have been most impacted by COVID-19 to ours, which if it happens would in part balance out the net loss on aggregate.

What message do we need to send out to encourage investment in biotech or digital health as a safe bets in the middle term?

Safe bets? There's no such thing. What there is, however, is a great deal of needs. Focus on those that are real and are sustainably met, and stay away from purely speculative plays.