nurturing early stage HEALTHTECHS: part 1
the need-driven process at the birth of Nina Capital
JULY 2021
by Mary Stuart
This is Part 1 of a short series of posts published weekly this summer and reproducing, with permission by The MedTech Strategist, an article written by senior writer Mary Stuart. The MedTech Strategist is the leading sources of global business, regulatory, and reimbursement analysis and intelligence on the medical device industry. Its readers are comprised solely of top-level medical device executives and professionals spanning the entire globe, mostly CEOs and Vice Presidents of the world’s largest medical device manufactures, as well as investors at growth-stage life sciences venture capital firms predominantly based in the United States.
Barcelona is a wonderful place to visit and live, with its shady plane-tree lined streets, curvy and colorful Gaudi architecture, open-air markets, and its long beach season. It’s also a great location for Nina Capital, a seed-stage venture capital firm focused on health technology, according to founder Marta-Gaia Zanchi, PhD, who moved from California to Spain to help grow the value of early-stage European companies operating at the intersection of advanced technologies and healthcare. With a background in electrical engineering, Zanchi moved from Italy to California to pursue her PhD at Stanford University. There, through many experiences, she came to understand the resource needs of healthtech start-ups. After training in a methodology for succeeding at medical device innovation taught by the Stanford Byers Center for Biodesign, she later went on to join the center where she founded and directed a new Stanford Biodesign program focused on digital health. (For more on Stanford Biodesign, see “Makower Returns to Stanford Biodesign,” MedTech Strategist, May 5, 2021 and “Biodesign at Fifteen,” MedTech Strategist, June 30, 2016.)
During Zanchi’s time in California she was also an equity partner at Data Collective (a venture capital firm focused on deep tech), the founding CEO of a start-up as well as a boutique consultancy supporting medical and digital health start-ups, and a strategic adviser to others. Her resume also notes that she was a member of the founding board of advisors for Stanford StartX incubated companies and an instructor on advanced regulatory topics at UCSF CERSI (Center of Excellence in Regulatory Science).
In the course of supporting start-ups in her various leadership roles, she says “I was approached by companies both from the US and Europe who had healthcare as a goal and technology as a means to enact change, and I was equally impressed by the opportunities that I saw in the US and Europe.” But there was one particularly acute need, she says. “European founders were consistently telling me there were no early-stage investors for these kinds of companies in Europe.” There were some impressive healthtech VCs in the US, Zanchi notes, “but when I would present such companies to friends and VCs in California, they would say “That looks great, but it’s too far away and it’s too early.” At the time, start-ups in Europe told her they found traditional healthcare investors, who understood the needs and markets for pharmaceuticals, biotech, and medical devices very well, but not digital health, IT, and deep tech. “They didn’t have the experience to vet risks on the technology and go-to-market sides nor to appreciate the full potential of their businesses.” On the other side, there were industry-agnostic technology investors, who have a deep understanding of technology but weren’t comfortable with regulatory clearance and healthcare payment models, and didn’t have connections to healthcare stakeholders.
Steeped in the methodology of Stanford Biodesign, the founder of Nina Capital did a needs-finding exercise, finding a gap at the intersection of early-stage investing, deep tech, and healthcare in Europe. The firm launched in Barcelona in 2019 and in less than two years (and during the pandemic), has invested in 18 innovative early-stage start-ups, with more to be announced soon.
Needs-Finding À La Biodesign
It seemed that no one firm put it together in the package Zanchi wanted to find — a depth of experience in healthcare, the ability to vet complex technology, a desire to invest at the pre-seed and seed stages, and access to the pan-European community of healthtech start-ups. Just as all innovation projects at Stanford Biodesign begin with a “needs-finding” phase, in 2018, Zanchi says, “This started as a spreadsheet exercise,” where she listed important criteria for Nina Capital, starting with what she calls “ground zero” for the firm. “In choosing a location for Nina Capital, some of the things that I thought were important: I wanted the firm to be located in a place known for the quality of the healthcare, the research in life sciences, and the clinical community, because the benefit of that proximity is what I experienced at Stanford.” Next, Nina Capital should be near young talent. “I admit the influence of having by then spent 15 years at Stanford. So, I wanted to be near great schools,” she continues. Logistical advantages were also in the top five criteria, since venture capitalists basically live on planes, especially when fundraising for an emerging fund manager. “I needed to be somewhere with really good air connections, to California and to the rest of Europe. I wanted great airports connected internationally, affordable, and close to a city center.” Finally, she says, “Honestly, I wanted to go somewhere where no other funds like this existed. I didn’t want to be among the usual suspects in London and Berlin.”
With her engineering mindset, she says she ranked all the major cities in Europe against the major criteria. Barcelona checked all the boxes. Barcelona has worldwide recognition in medicine, notes Nina Capital Partner Marc Subirats, with “some pretty relevant university hospitals doing high-quality research.” And it also boasts prestigious universities, the University of Barcelona, which is particularly well-reputed for its programs in the life sciences, the Autonomous University of Barcelona or UAB, the Polytechnic University of Catalonia, and the IESE, a top-ranked business school internationally, to name only a few. Further, there is a well-established medical business community in the city. Barcelona is home to Spain’s largest home-grown pharmaceutical companies, among some 74 pharmaceutical and medical device companies with operations in the city, as well as the well-established life science-focused venture capital firm Ysios Capital. It doesn’t hurt that Barcelona has a lot to offer tourists, and (in non-pandemic times, that is) it probably wouldn’t take much to convince a VC, entrepreneur, or key opinion leader to travel there. “There are lots of really good reasons to be here, and it also checked the box of not many other investors staking out a position at the very early stage at the intersection of healthcare and technology,” Zanchi says.
Accordingly, Nina Capital was founded in 2019, began building a team of six people, and raised a first fund of €15 million to be allocated to healthtech companies at the seed stages. The fund was oversubscribed 10 months later, closing at the maximum size of €18 million, and the firm is on its 18th investment with three more pending announcement. As it nears the end of the investment period for its first fund, Nina Capital is preparing to raise a larger fund, to help well-chosen fledgling healthtechs grow in value.
To read Part 2: when technology and healthcare converge, click here
