The success of BioNTech and how it is driving Technology and Healthcare investments in Germany and Europe
It is generally accepted that the Comirnaty vaccine developed by German BioNTech in collaboration with American company Pfizer has likely protected tens of millions of people or even more around the world from suffering severe illness or even death from a Covid-19 infection.
What is not so well known is the significant effect this breakthrough development from Mainz, Germany had on the sentiment towards overall technology investments in Europe and especially Germany.
It has recently been reported by several economic institutes that the development and domestic production of this groundbreaking vaccine by this German start-up alone has boosted the economic growth in Germany by a spectacular 0.5% in 2021. This is an impressive number achieved by only one singular company as overall growth in Europe’s largest economy in 2021 stood at 2.7% according to a first estimate by the German Federal Statistical Office.
In comparison, without the BioNTech success, it would have consequently only reached a meagre 2.2%. This means that BioNTech and its breakthrough development vaccine based on mRNA technology has accounted for nearly a fifth of overall GDP growth in 2021. It is hard to think of any other example in recent history in which a single company had such an impact on German GDP.
The success of BioNTech has proven to the world that there is excellent potential in Europe’s research landscape and that the “old continent” actually can keep pace with its competition from the Americas and Asia. This increased awareness has clearly helped in attracting investments by global investors in European companies and has especially supported the recent activity in the European and German Technology sector.
Overall, according to recent data collected by Crunchbase, an unprecedented number of 86 European companies joined the unicorn club of privately held startup company valued at over US$1bn in 2021. This represents more than 5x the count of new unicorns in 2020 from Europe, and more than 3x the previous record in 2019, when there were 23 new unicorns.
According to a report by Silicon Valley Bank (SVB), venture investment in healthcare alone nearly doubled in Europe last year, rising from US$8.4bn in 2020 to US$13.9bn in 2021. While investments in the health tech and medical device markets in Europe saw a 150% increase in funding, Biopharma had a boost in venture investment from US$4.6bn in 2020 to almost US$6.6bn in 2021 reflecting demand created by the COVID-19 pandemic.
Especially noteworthy are the funding rounds of Swedish digital healthcare firm Kry, which raised US$300m, French biotechnology company Mnemo Therapeutics, which completed a US$90m financing round and Swiss diet and lifestyle coaching scaleup Oviva, which raised US$80m.
2021 was also a fruitful year for technology IPOs in Europe and according to Tech.eu a total of 28 companies went public through an IPO or a SPAC transaction, raising at least €100m each.
In line with the development of unicorn companies, the amounts invested in European unicorn companies also grew and has more than quadrupled year over year, with US$49.6bn invested across 185 funding rounds, up from US$11.8bn in the previous year.
It is noteworthy that many of these funding rounds have been completed at a so far unprecedented pace of funding. In Germany for example food delivery service Gorillas, founded in 2020, raised US$1.3bn across three funding rounds from Series A through C within only a six-month timeframe in 2021, while its competitor Flink raised Seed through Series B funding within 12 months, totaling US$1.1bn. These funding rounds can stand in addition to the US$900m financing round for next generation online brokerage Trade Republic, the US$648m founding round for FBA and E-Commerce player SellerX and the US$400m round for Mambu, a cloud-based banking software FinTech company.
From a European perspective noteworthy fund raisings came from the French football fantasy game company Sorare, which raised Series A and B funding totaling US$729m, Spanish staffing platform Jobandtalent raising US$727m and Austrian companies, GoStudent a virtual learning platform connecting students and teachers, and crypto exchange BitPanda raising US$668m and US$445m respectively.
Although European Technology companies are raising more money than ever before and there is a common understanding among the financial community that European companies are more and more able to rival competition from other continents, for a long time Europe has struggled to keep pace in regards to investment interest compared to American and Asian companies.
Europe still represented only 14% of the 595 new unicorn companies created globally in 2021 and of those unicorn companies 341 are US-based, representing an almost 4x larger count than Europe.
Following this shift in global perception, an increasing number of prominent global funds are now raising new European investment vehicles and are creating dedicated pools of capital for the region.
Many believe that this increased competition for high-quality start-ups and growth companies in the region will continue to further push start-up valuations up and lead to even greater growth over the next years in Europe.
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By: Dr. Nicholas V. Hanser