AI, regenerative medicine enabling technologies, and clinical diagnostics are major investment opportunities, says life science executive Reinhard Vogt who has joined Dynamk Capital.
Reinhard Vogt served as an executive at Sartorius AG for over 35 years. During his tenure, he was responsible for the strategic development of the firm’s Bioprocess Division that grew from around $30 Million to around $1.2 billion today, reached through a combination of strong organic growth and a strong focus on M&A and the integration of innovative technologies.
In January this year, he joined venture capital (VC) firm Dynamk Capital as a new general partner and managing director, and he spoke with BioProcess Insider about challenges in life science investments and some of the best opportunities for investment within the bioprocessing space.
Bioprocess Insider (BPI): Why did you choose to make the move away from industry into venture capital?
Reinhard Vogt (RV): During the last 18 years I led and integrated around a dozen acquisitions. Most of them were relatively small that needed finance and management support to grow quickly in revenue and profitability. Today, these acquisitions represent two-thirds of Sartorius Bioprocess Revenue.
This means selecting the right targets and helping them to commercialize the technology quickly results in a significant multiplication of their value. This has been a significant part of my professional life and it is exactly this expertise and competence that is of high value for a VC firm and its investors. Furthermore, my strong international and global network especially in Europe and Asia will be of big benefit in this respect.
BPI: What problems have you seen in life science investments?
RV: The major problems or challenges in life science investments are first the selection of the right targets. The market is crowed with new technologies, early stage spin-offs of universities and start-ups. However not all of them have the commercial potential that provide the expected ROI to financial or strategic investors. Particularly, strategic investors expect not only a financial return, but also want to achieve an improvement of their competitive situation, or through customer acquisition. This means a VC firm must have the competence to identify the pearls among all the shining stones.
BPI: So what happens once a promising potential candidate and/or technology is identified?
RV: An effective and efficient “Go to Market” strategy has to be developed that enables fast and profitable growth. This is probably the biggest challenges for these enterprises as their competence and expertise is in the field of science and technology but not necessarily in strategic marketing know-how and management especially when it comes to the more and more important Asian markets. Additionally, these very young enterprises do not have access to a global network that would enable them a much faster growth.
BPI: How does speed-to-market affect investment decisions?
RV: There are many competing technologies in the pipeline and it is of outmost importance to become not only a technology leader but also a first mover. This needs, of course, a proper financing but also the necessary focus and often from a management point of view not to develop everything that is technical possible.
Proper financing, however, also means a professional management of the financial and human resources. Start-ups on the market that just have a too high burn rates that constantly need new financing rounds makes an exit very difficult.
“We are not looking for the gold mine but we want to enable the shovels”
BPI: So with all that, where are the best investment opportunities currently?
RV: AI is still completely underrepresented in the field of biomanufacturing, but also in the field of clinical testing and supply change management. Also new enabling technologies in the field of regenerative medicine and in biomanufacturing that contribute significantly to the reduction of COGs offer huge commercial potential, provided they market in the right way. Another growing market is definitely the field of clinical diagnostic. There are innovations in the pipeline that can revolutionize medical diagnostics. [These] are exactly the areas that Dynamk is focusing.
BPI: And finally, why did you choose to join Dynamk Capital specifically?
RV: First of all I like the focus of Dynamk in the field where I have my competence and all my experiences, and I can be of great value to the Dynamk portfolio companies, and ultimately, Dynamk’s investors. The business strategy is sound and not too complex; we are not looking for the gold mine but we want to enable the shovels. The partners, associates and advisors have exactly the competence, experiences and proven track records that I described and is needed in this industry.