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Nina Capital invests exclusively at the intersection of healthcare and technology
Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh, how times have changed! While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We're highlighting key members of the community to find out.
Marta-Gaia Zanchi, PhD, is founder and managing partner at Nina Capital.
Zanchi was born in the pre-alpine landscape of the North of Italy, in a narrow Valley full of small villages and high-elevation passes provided only with narrow steep trails and mule tracks. Milano, where she moved as a teenage student and lived for five years, was to her village what Mars is to Earth. From Citta’ Studi in 2005, moving to California seemed an easy intergalactic jump—and there she stayed for fourteen years, in and around the outskirts of Stanford in the heart of Silicon Valley. All in pursuit of always the same, one desire: improve healthcare with the use of technology.
In middle school, Zanchi briefly contemplated becoming a physician, but a persistent habit of dismantling home appliances and tampering with souped-up motorbikes had quickly revealed my nerdy side. Most importantly, she was stubbornly convinced that technology could be for doctors what capes are for superheroes. She ended up studying biomedical and electrical engineering, from a bachelor at Politecnico di Milano to a doctorate at Stanford University, training as a system designer of medical instrumentation—mostly imaging systems leveraging all radiation types known to man. The jokes about their residual effects on her personality abound.
In 2007, Zanchi took a class on the Biodesign health technology innovation process, and something inside of me resonated deeply. Upon graduation a few years later, she joined the Biodesign community as a member of the faculty of the Stanford School of Medicine and founding director of the Center’s digital health programs. Here she was privileged to enjoy a decade of learning from my colleagues; hundreds of students, residents, and physicians; and the broader ecosystem of innovators and their investors for whom this special University continues to be an inescapable center of gravity.
An application of the Biodesign process led her to create Nina Capital as a way to invest in and serve a growing generation of European need-driven founders at the intersection of healthcare and technology, in order to support their businesses’ international ambitions. She was drawn to the potential that Barcelona, Spain, offered to launch the firm. Zanchi was right: it was here that she met her amazing teammates.
VatorNews: What is your investment philosophy or methodology?
Marta-Gaia Zanchi: Nina Capital is a specialized venture capital firm investing exclusively at the intersection of healthcare and technology. Specifically, we are inspired by a vision for the future in which data, computing, networks, and other digital and deep technologies deliver meaningful value outcomes and insight for improving health and the provision of care.
In our investment criteria and process, we are informed by a Stanford-born methodology of health technology innovation known as Biodesign. Since 2001, Biodesign has proven to de-risk the process of new venture creation by applying a need-driven and value-based approach to reinventing healthcare with the help of technology.
We back need-driven entrepreneurs who are looking to transform healthcare, through the meaningful application of technology. Our main geographic focus is Europe, including the UK, but we also invest in North America and Israel.
VN: What are your categories of interest?
MGZ: We invest in both medical devices, meaning solutions, software or hardware, intended for use in the diagnosis or cure of disease, and healthcare tools and solutions, generally software, that are designed to help healthcare organizations, including hospitals, biopharmas, insurers, etc, be better at what they do.
We invest across specialties, without bias.
We are especially interested in data and information.
VN: What's the big macro trend you're betting on?
MGZ: As a specialized fund, it is hard to commit to one trend. We are betting on healthcare. That being said, we have shown increased interest in the future of clinical trials. Clinical trials consume the latter half of the 10 to 15 year, $1.5 to $2.0 billion development cycle for bringing a single new drug to market. A failed trial sinks not only the investment into the trial itself but also the preclinical development costs, rendering the loss per failed clinical trial at $800 million to $1.4 billion. The causes of failure are numerous. Clinical trials are not only expensive but also highly regulated and complex, creating a huge pain point for pharmaceutical companies.
Apart from the need, there are two factors fueling a sense of immediacy to provide solutions: that COVID challenged the progression of many clinical trials, causing huge delays and a need to optimize the efficiency in which trials are conducted, and the FDA’s policies promoting Expanded access and the use of RWE in clinical trials incentivize pharmaceutical companies to find solutions to ease the complexity of the process.
At the intersection of health and education, we also see a shortage of healthcare training capacity and at the same time a shortage of trustworthy informative pathways for patients.
Again COVID, created even a larger need around the world shortages of workforce, and misalignment of needs and skills. The demand for and size of the global health workforce are forecasted to grow substantially in the next decades as a consequence of population and economic growth, combined with demographic and epidemiologic transitions. Globally, we need to train 18 million more healthcare professionals by 2030 to guarantee health system operations. The shortage is exacerbated by the ever-increasing specialization and fragmentation of medical specialties.
There's also the future of decentralized, asynchronous care delivery. From telemedicine to integrated virtual care, the ecosystem converging to this vision is exposing its gaps. And the future of manufacturing, of both therapeutic assets, meaning drugs, and medical devices, especially as we move towards ultra personalized therapies, for example cell therapies, and devices, for example custom prosthetic devices and implants.
VN: What is the size of your current fund and how many investments do you typically make in a year?
MGZ: Our first Fund was established on September 27, 2021, and by February 4th, 2022 we already surpassed our target size of €40 million. Currently, we successfully raised €42 million, leaving only €2 million to reach the hard cap of €44 million.
Our expectation is to make ~10 investments a year. So far, we made six investments in our second Fund.
VN: What stage/series do you invest in and how much is that in dollar amount for you?
MGZ: Our sweet spot is pre-seed and seed. We may invest opportunistically in Series A. Our goal is to reach a 5 to 10% equity goal. By this rule of thumb, we invest as little as $200,000 in a PreSeed and generally $400,000 to $1 million in a seed round.
VN: What kind of traction does a startup need for you to invest? Do you have any specific numbers?
MGZ: Healthcare companies often have a different development path, many times, especially at the pre-seed traction is not a key measurement for us. We believe the creation of new businesses is built on in-depth understanding of the complex network of healthcare system participants and marries that with meaningful engineering innovation, advanced data science, and information technology-enabled products and services. We look for and seed founders determined to effectively and efficiently serve these participants on the European continent and internationally.
With this in mind, we developed a set of criteria internally, inspired by the Biodesign approach. We are diligently following our investment criteria with every company we see. The first hurdle for a company to get our attention is they are solving a healthcare need. Healthcare is a multi-stakeholders industry with competing needs. We are looking for founders who truly understand the problem and why it is compelling and rise about all other needs of their addressable population.
VN: What other signals do you look for? Team, product, macro market?
MGZ: We look for need-driven founders, founders who have developed in depth expertise around healthcare problems, and let their learnings define the criteria for the design of their technology innovations and business models. What we don’t do is enable technologies that "may be" applicable to the healthcare industry.
We look for evidence of safety and effectiveness, as well as signals of value: strong health economics arguments for adoption, and not just clinical outcomes.
VN: What do you think about valuations these days? What's a typical Seed pre-money valuation and Series A?
MGZ: Valuations in Europe are increasing. Since the inception of Nina Capital Fund I in September 2019, we have seen almost 3,000 companies. Our approach to everything we do is data-driven. We have an internal database that tracks different data points, including valuations. Based on our data gathered, average pre-money valuations for pre-seed are €2.5 to €4 million, and for seed, we see it at €5 to €8 million euros.
The trend is increase in valuations but for the pre-seed, seed stages we see a moderate change compared to the later stages.
VN: There are many venture funds out there today, how do you differentiate yourself to limited partners?
MGZ: We are a micro-VC, very early stage, highly specialized fund and we plan to stay this way. We are a diverse team with a consolidated data-driven approach. Our commitment to our LPs is to stay committed to our identity. That sounds simple but we found that our compelling approach actually differentiated us from many other VCs.
VN: Venture is a two-way street, where investors also have to pitch themselves. How do you differentiate your fund to entrepreneurs?
MGZ: A few things: we are a diverse team with technical healthcare backgrounds, entrepreneurial backgrounds, deep knowledge of the healthcare ecosystem. This means we can both understand technical details, empathize with founders (having been there ourselves), provide meaningful advice and mentorship specific to the healthcare and healthtech industry. We are very hands-on in terms of support. We are venture partners and investment advisors specific to the healthcare industry. Our LP base is strategic within the healthcare industry, follow-on financing, etc. And we have a unique European-US combination in terms of knowledge and experience.
VN: What are some of the investments you’ve made that you're super excited about? Why did you want to invest in those companies?
MGZ: We love all our kids the same.
VN: What are some lessons you learned?
MGZ: The attributes of healthcare systems vary greatly across countries (that we did know!), but attributes of great founders are universal.
VN: What excites you the most about your position as VC?
MGZ: We are in a position to learn and grow as both individuals and a team on a daily basis. And we do that by serving other individuals and their teams to accomplish meaningful positive change in healthcare. What more to ask?
VN: Is there anything else that you think I should know about you or the firm or your thoughts about the venture industry in general?
MGZ: Not only healthcare, technology, and the startup ecosystem are changing rapidly—so is the venture capital industry. It’s exciting to be in such a dynamic environment and do our best to adapt to change. It keeps us humble and focused on results.
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