Ep4: Demonstrating ROI to LPs and the Convergence of Medtech, Biotech, and Digital, with Asabys Partners

[00:00:00] Henry Peck: Hey everyone, it's Henry. Welcome to Emerging Medech Today by LSI. Today, I'm joined by Josep and Clara of Asabys Partners. Together, we discussed the metrics and operational strategy that Asabys leveraged to reach the first close of Asabys Health Innovation Investments Two, their second fund, how they think about and navigate the convergence of traditional medtech and biotech sectors with digital technologies, their perspectives on achieving liquidity in the evolving marketplace, and their insights on the growing Barcelona innovation ecosystem. Enjoy!

[00:00:35] Henry Peck: Clara, Josep, thank you so much for joining me today. Before we jump into it, we'd love to get a little bit of a background on both of you and how you founded Asabys together.

[00:00:44] Clara Campas: My name is Clara Campas. Thanks for inviting us to this podcast. I'm a scientist by training, and I had, uh, after that period of scientific training, um, several operational positions in the biotech industry and in the pharma industry, particularly in the south of Europe. [00:01:00] And, at the end of 2017, starting 2018, I really wanted to go back to disruptive science, and that's why in summer, just five years ago, Of 2018, we co-founded together with Joseph as service partners, which we will explain a little bit more today.

[00:01:17] Josep Sanfeliu: Me myself, I've been working in the healthcare industry now for nearly 20 years. As a VC, 15 years. I started my career as a patent attorney and then moved into finance, then moved into pharma. And in 2018, after seven years as a biotech VC, we really thought with Clara that we would have a chance to develop a new strategy or a new way to envision investment in healthcare by combining health tech and biotech all together just basically like the industry is doing and by and how patients are looking for their own, you know, healthcare is basically take care of me.

[00:01:50] Josep Sanfeliu: Whatever that means, be on the pill, using my phone, using devices or technologies, right? So, uh, so it was, uh, the way it was burned. So Asabys is this [00:02:00] hybrid strategy fund or firm that raises funds to invest both in health tech and biotech. this [00:02:00] hybrid strategy fund or firm that raises funds to invest both in health tech and biotech.

[00:02:06] Henry Peck: Awesome. And speaking of those funds that you raised to invest in 2023 has been a big year. Congratulations on the first close of your a hundred million dollars this year. Would love to hear a little bit more about the new fund strategy, where you're looking to deploy this new fund geographically, stage of company, therapeutic area, et cetera.

[00:02:25] Josep Sanfeliu: Yes, the Asabys', uh, second fund, it's called Asabys Health innovation Investments two, was raised in 2022, started to be raised in 2022, at the very end, just before the markets, uh, relatively closed in 2023, we were able to do the first close based on the success of the first fund, at least in terms of IRR and deployment and disbursement of, of capital in the first fund. Most of our previous investors, 96% of those, repeated as investors in the second fund and we got also some new investors joining them.

[00:02:58] Josep Sanfeliu: That allows us to reach [00:03:00] the 100 million, roughly, first close figure that allowed us to start employing and developing the strategy. We're still working on the fundraising, as you know. We have some period of time for the final close, which is basically going to happen in the coming year, 2023, end of the year, we believe.

[00:03:15] Josep Sanfeliu: Markets need to improve a little bit, but the outlook is good. And since the first close, we started deploying the fund in different investments. As of today, July 2023, we have announced two investments, which is a company in diagnostics, DeepUll, which is a technology medtech diagnostic advanced technology for sepsis.

[00:03:39] Josep Sanfeliu: And the second investment has been a company in biotech in Barcelona. The spin off of a absolutely reputed research center in oncology. And the third investment, which will be very soon, announced probably by, by the time LSI Barcelona happens, the announcement will be already out there. It's going to be a very interesting investment in medtech, right?

[00:04:00] Josep Sanfeliu: That is a perfect description of what we do because that way we are investing in high tech for diagnostics. It's med tech, but it's biotech also, which is actually what drives our strategy. And that gets me to the comment about how we work, how we do investments. We are not doing just some health tech associated to our biotech core investment, which is most of what many firms do, which is very legitimate and very sensible strategy. We try to do a real pure hybrid type of strategy in which the efforts of the team, efforts of the whole group at Asabys is focused in balancing the digital health tech investment activity with the biotech activity.

[00:04:39] Josep Sanfeliu: And I have to say that since our background is mostly pharma, biotech, healthcare, life sciences, what we are actually doing investing in both at the same time is putting a lot of energy, but a lot of know how, which comes, as you very well know, from the highest standards and thresholds of healthcare industry, which is the pharma regulated industry.

[00:05:00] Josep Sanfeliu: So when we look at the technology, at a scientific approach, which is technically or technology advanced, and it's not necessarily a molecule or a protein, we treat that investment as if we would be investing from the classical pharma. So our regulatory perspective, our evaluation of the IP, our evaluation of the clinical validation and the clinical value, and more importantly, the economic impact of that technology in the health care systems, all of this has to have a rationale. No from economically, IP, many other items that we would look very thoroughly as if we were biotech investors which is basically, for us, it's the same thing. And we all get together in the same businesses.

[00:05:39] Josep Sanfeliu: And Clara brings all her acumen in the pharma and biotech and scientific background. I bring more of the medtech together with the team, which is a combination of professionals. That's basically with backgrounds in science technology, but always in the healthcare space and in the venture capital business.

[00:05:55] Henry Peck: It's really exciting to see both from your first portfolio and this new [00:06:00] portfolio, how many companies you're involved in where there's LSI alumni like InBrain Neuroelectronics. You're co investing with Sofinnova Partners, who's another LSI alumni investor. And you mentioned even these first three deals being in high tech diagnostics, therapeutics, and medtech, covering the breadth of areas that you're investing in.

[00:06:20] Henry Peck: How do you make sense of building a portfolio across so many different types of technologies and indications where the behavior of those companies may be different, their regulatory pathways and frameworks may be different, but you're looking for kind of a consistent thread of value creation for patients and for shareholders?

[00:06:38] Clara Campas: If you want, we can add even another level of differentiation and diversity, which is different stages of those companies. So we can invest very, very early stage in seed, or even pre-seed, helping entrepreneurs to build some of these future huge companies. But we can also invest in companies [00:07:00] a bit more mature, like we have been doing in our first fund, and we will be continuing in our second.

[00:07:06] Clara Campas: So from company creation to series B, C, and onwards. That's done by just surrounding ourselves by spectacular people, very well trained people that has repeated and knows how successful look like and how success look like. So it's all about that to understand which is the next value inflection point of that particular product of that particular platform, that particular company, and just making sure that we can work together, not only with the entrepreneurs, but also with the management teams and with additional people that we can add to the company to go to next step. I think you need to be ready to bring the company forward as far as needed, but creating optionalities to make sure also that you start showing the impact in patient outcomes to see whether they are also windows of opportunity for early exits.

[00:07:55] Henry Peck: Josep, you mentioned that outstanding participation in this new fund from [00:08:00] investors in fund one. How did you demonstrate ROI beyond some of the traditional metrics, and with the traditional metrics, to returning and new investors in this new fund and what can other fund managers who are raising in tough market conditions learn from that experience to help them raise maybe their first fund or even additional follow on funds in this market?

[00:08:25] Josep Sanfeliu: Yeah, very good question because precisely now it's not easy to raise that money and sometimes having the chance to, or the opportunity to fund to raise a new fund it's also tough because now when the first fund everyone is like looking at you and they might just you know place a bet. The second fund they're looking at a fund which has already been invested. So to us, the most important thing in my experience and things that appreciate investors appreciate very much, for me there are three things.

[00:08:53] Josep Sanfeliu: The first thing is investors are investing and investors paying for our expertise [00:09:00] to identify opportunities to be investing in right? First thing you need to raise the money, of course, but once you raise the money, the first thing they want to see is that you work hard identifying opportunities, and therefore the first thing you need to do is deploy.

[00:09:18] Josep Sanfeliu: So we've seen a lot of firms that are starting to raise money, they do a first close, and it takes them nine months to invest in a company. That, as an investor, we are investors, as you know, managers are investors also in the funds, we have our own commitment. We went to see the money work immediately.

[00:09:34] Josep Sanfeliu: That's what we are here for. It's like working and identifying and selecting that 1% or not even of everything we see. So we need to have a very strong activity in deal flow management, in sourcing, in analysis, and these requires a big team, which is the other thing. When you have to have all these expertise on the table to work on deals, you need to have a very strong team in science and in credentials, both from a background, scientifically, academically, and also professionally.

[00:10:05] Josep Sanfeliu: So first to me, first identifying, let's say metric is, how are you doing with my money? How much time are you spending in identifying investment? So first thing, investing relatively quickly, but not in a speedy way that you are making mistakes. So that means a lot of work. First deployment.

[00:10:25] Josep Sanfeliu: Second question, which is very important, and that's why Asabys has a big team, 10 people working in Asabys for two funds, which sits in the management, close to 250. 10 people, why? Because the second thing they really appreciate very much, and they do a lot of scrutiny, at least our investors, my perception is that is even more important now, which is portfolio management. How much time do you devote to the companies? How many people are active in those boards? How active are you in the board? How do you get ready for the board meeting?

[00:10:52] Josep Sanfeliu: And that doesn't have to do with money [00:11:00] size because Asabys is a mid sized venture capital firm. What our presence in the boards, [00:11:00] it tends to be not only in a leading position, but sometimes as the only leading investor. And you can ask some of our colleagues how much involved we are there.

[00:11:08] Josep Sanfeliu: And that's also part of our team structure. We are not just, you know, three people that work part time and we have, you know, scholarships and we have these people in part time. No, no, no, no. It's 10 full time people. With a lot of, uh, dedication, especially to portfolio, which is a second one.

[00:11:26] Josep Sanfeliu: And then obviously, Henry, as you can think, which is the third metric, results, IRR, multiples, and not multiples on accounting basis, it's cash on cash. Cash on cash or liquidity events, liquid events, exits that at least you get something in exchange so you can get shares of a quoted company. But liquidating, exiting, cash on cash ideally, is the third metric and then obviously that turns into IRRs which is the financial metric.

[00:11:55] Josep Sanfeliu: So to us this is the way at least we were able to perform in front of our first investors. [00:12:00] Working hard to identify and invest, working hard to bring value to the investments and to work towards exiting, and working hard exiting and demonstrating cash on cash returns.

[00:12:11] Henry Peck: Clara, looking at that broad base of technologies that you invest in from pure biotech, the molecules and drugs, pure medtech, hardware alone, traditional devices, and then the digital intersection of those two spaces where you have something like computational drug discovery, the digital intersection of traditional biotech and digital technologies, and then something in the kind of that digital medtech space, where you have devices that have connected platforms or data integrations, maybe a hardware hook into the O. R. with a digital platform behind it and data being fed back into that product. Talk to me about what you're seeing in digital broadly across your the spaces that you're investing and how is digital affecting those two big buckets of devices and biotech from your perspective?

[00:13:02] Clara Campas: Thanks for that question, Henry, because that really spot on. So when we started Asabys in mid 2018, we had the clear picture of what was a kind of hypothesis at that time, that these two worlds, which are more than two, but two big worlds or verticals were really converging. There were some clues around that that was happening, particularly medtech being more and more connected.

[00:13:29] Clara Campas: So generating a huge amount of data that could be used not only after the hardware was being used, but also during and making sure that you could use this connectivity and data to just improve how that device or hardware was going on and or was working. We were starting to emphasize this kind of things, in fact, we do have some of these investments in our first fund, which you are combining things. But more and more we were seeing also, as you were saying, all this digital and [00:14:00] technologies, enabling technologies that are jumping, not only in drug discovery, but also in drug development, or just adding additional layers of confidence and challenging what these technologies or basic chemical technologies can do.

[00:14:14] Clara Campas: In fact, we also have a company in our first portfolio, Nuance Therapeutics, that could be considered tech bio company. The fact that it's using algorithms together with wet lab data to generate a platform, becoming enriched and improve every time when making and designing drugs for certain undruggable targets. The same way at InBrain Neuroelectronics, we do have these devices in graphene for the first time, in the nervous system, central peripheral of human beings, but that's hugely embedded with data that is making decisions much more accurate and time to reactions shorter.

[00:14:55] Clara Campas: So digital is really everywhere. It's like a blockchain, made decision making, machine learning, AI. It's not only name dropping. These are realities that we see every day in our companies. And we can also include that from outside. So when we have a very good science or technology that is not necessarily using that first instance, you can always, and you need to consider, how could I improve that technology, that product by using this type of learning? I don't think anyone can not do that at this point.

[00:15:30] Henry Peck: That's really interesting and again goes back to kind of what you and Josep were talking about earlier around portfolio success and the expertise that you bring to help these companies grow and scale and that leads me to kind of a follow up question here is you're investing in companies and platforms that are digitally [00:27:00] enabled across biotech and medtech. What does it take to scale these types of ventures today?

[00:15:55] Clara Campas: So you need to be ready to reach the market. So scale up is a process that can guarantee success and that can offer early exit opportunities, but you need to be ready, which means you as a fund, but also the company needs to be ready to go all the way to the market. And this past year and a half showed that very clearly. You could have a clear pathway to then go to an IPO or to be acquired by a corporate that is now struggling with any other issue. So companies need to be invested and funded and let in the correct way to go all the way around and to make sure the product and the products can enter the market globally in the appropriate way.

[00:16:38] Clara Campas: With this, it doesn't mean that we are not creating those window opportunities for exit because that's our job also. So everything that has to do with patient outcomes, that's the willingness to pay for payers, for corporates, is exactly there. How you are impacting the patient outcome that can be spit off a correct diagnosis to then give the correct treatment that can be having a better drug that works better and quicker.

[00:17:05] Clara Campas: It has to do with that. Or a medical device that is informed enough to do the acro production and just trying to get out of this trial error that we have seen in the past. There's no need for that anymore. And that can be very easily trained and very easily done.

[00:17:20] Clara Campas: So scaling up is about that. You have to envisage always, you need to be in the market sometime. Even if you can exit earlier, you have to scale up. And to scale up is not reaching the market from the regulatory perspective, is really selling this product or technology into the market. And for that, you need to scale. And we can see this type of a scaling up, let's say challenge, particularly in the digital space, in digital health companies, uh, where you can see huge amount of different tiny companies offering one or max two solutions for a particular indication in a particular subset of patients.

[00:18:02] Clara Campas: It's very difficult to scale that up because you can scale it, but you have a kind of a max. You can go worldwide even, but how do you scale that to guarantee the success of the company? So particularly in the digital market, we are now facing a huge amount of consolidation that can be hard to solve for some companies and for some investors.

[00:18:24] Clara Campas: But, uh, we have been trying to position ourselves very strategically to invest in those potential consolidators of the market in that sense. Same for medtech, but then in the medtech, it's usually more about being the player in a certain therapeutic area, where in digital is much more about a solution across different therapeutic areas. And in biotech is a bit more classical business with the technology embedded inside, of course.

[00:18:52] Henry Peck: Clara, you'll be speaking on a panel at LSI Europe about exit strategies and opportunities to achieve liquidity faster. When you talk about [00:19:00] that scale up process across these different buckets, how it may be different between biotech and medtech and some of the digital health investments that you see, how does this scale up process intersect with opportunities for achieving liquidity and the way that companies should be thinking about liquidity in their scale up process?

[00:19:21] Clara Campas: It's a bit different depending on the technology or the solution you are trying to bring. So for biotech at this point is all about corporates. So you need to know from the very beginning much before you are making a decision to invest in a certain product technology or therapeutic area that that is of interest of corporates at least midterm will be.

[00:19:45] Clara Campas: I think that's key. And keeping this constant conversations with the corporate, what do you want to see? How do you see competition? What is what you will be expecting for this type of product or technology? And this needs to be a real basis. That's why we love co investing with corporates. We like to have intermediate licensing deals or core development. I think the sooner, the better you can get these people in. Even more than one, that creates some competition tension, but also the know how these people is bringing to board to committees is very high.

[00:20:16] Clara Campas: That's for more for the biotech and particularly in platforms in technology platforms, such as a spice bio your nursery politics. Others are already kind now from second fund. If you can early partner some of this, that's probably a way to proof of concept that the platform is delivering products that are attractive for these corporates and third parties. The exit can be an IPO, but without, I think that no one can be just blind and close to the external environment and then decide that you will be doing an IPO in five years and that will be a successful IPO.

[00:20:48] Clara Campas: That's not how it works. Corporate business development teams are becoming more and more sophisticated, and that's very good and nice because then we can create [00:21:00] ways to develop, co-develop, creating options, whatever that makes sense to everyone, and also ways to escape from that if at a certain point it doesn't work anymore for any of the parties.

[00:21:12] Clara Campas: I think that for medtech hardware, you really need to be ready to reach the market and to create some commercial traction. In some particular areas and therapeutic areas and with very disruptive technologies, you can just try to make sure that there is the appetite of corporates to jump in.

[00:21:29] Clara Campas: With a single product, meta company is very difficult to do an IPO. So everything that has to do with consolidation will also be important in that setting. With digital, it's a bit different because the identity of the potential acquirer is not that clear. That's an emerging vertical, if you want. So, what that would be would be that big techies, tech companies worldwide, the Apples, Googles, Microsoft, or would that be the pharma side?

[00:21:57] Clara Campas: Quite unlikely. Pharma's are clients, [00:22:00] but probably not potential acquirers of these pure digital health companies. But then you have all the payers, and why not? If you are able to scale up and create this market traction, consolidate your business model and start having additional users, scaling up users, ramp it quickly, and then create the income and the appropriate income, even private equity or secondaries are ways for investors like us, ventures just to jump out before an IPO or after an IPO. It can really depend.

[00:22:32] Clara Campas: So I think that it's not that strange. It depends on the product to our development, the different strategies you have for exiting and the clarity you have on the potential acquirers. On IPO, now the window is closed, but we still see some things happening [00:34:00] and speaking July, probably September will be much better. So they are very good companies, well balanced with the appropriate and correct valuations and a nice pipeline that are able to jump into NASDAQ or other markets and have nice extraction and even acquisitions after that. So I think it's about being smart and making sure you have, your company is well funded and an efficiency of the money they are using that is nicely balanced.

[00:23:14] Henry Peck: There's two threads I want to pick up on for follow up question in what you said. One is about a kind of burgeoning problem, as you mentioned, from exciting technology. In traditional biotech, there's an exit pathway there. In single devices, metals and plastics, surgical devices, there are strategics that acquire those companies. It's not an IPO heavy market. But as you mentioned, now you have these larger platform plays in med tech specifically, where the acquirer, maybe it's a med tech or health tech is less clear.

[00:23:32] Henry Peck: There are strategics that acquire those companies. It's not an I P O heavy market, but as you mentioned, now you have these larger. Platform plays in med tech specifically where the acquirer, maybe it's a med tech or health tech, is less clear and let's play a little bit of a game. Right? I'll pick a specific market that I'm particularly familiar with from my previous experience and see kind of how the exit landscape could look.

[00:23:48] Henry Peck: And let's play a little bit of a game, right? I'll pick a specific market that I'm particularly familiar with from my previous experience and see kind of how the exit landscape could look. So take a digital diagnostic or therapeutic in Alzheimer's disease. It's an area where, as you mentioned, you have big pharma investing in the drug development landscape, they may be partners for research and clinical trials. Maybe not big strategic acquirers. You have big tech companies, the Apples and Googles, that could have the scale to deploy something that could be a non FDA regulated medical device, a wellness product to millions of people, or even an FDA regulated medical device version to millions of people globally. But are they Interested and resourced to get into that type of space?

[00:24:36] Henry Peck: Your traditional medical device companies that maybe have neuromodulation, traditional diagnostics, and non drug therapies for this type of Indication, but is this a little too far outside of their strike zone? What do you say to a company like that as they're considering their long term exit opportunities, and how should they be thinking about a an exit strategy given that unique space that you highlight that they fall in that kind of digitally enabled medtech space?

[00:25:08] Clara Campas: So first thing I would tell them is go and speak with payers. Go to the Elevans United and these people on the world and go and speak with them. Particularly in the Alzheimer's field you just mentioned, I think that in that particular case, and maybe others, early diagnostics is a must. And the two key players on being interested in having early diagnostic would be first the patient, patient and family. But second the payer for sure. And third the pharma because they really want to jump in and it's being very difficult to prove benefit from drug interventions just probably because it's too late when you start treating those patients in clinical trials.

[00:25:47] Clara Campas: But for the pharma that would be a client, so companion. They don't know whether this particular company and technology will be the winner of this race or there will be another so they don't want to marry anyone at a certain point probably. So the first thing I would do is going to payers and ask and build together with them who would be willing to pay for that and how much, and what do you need to show for someone to be paying for that, let's say scale up of this technology in the screening patients screening patients at risk, things like that, right?

[00:26:19] Clara Campas: So that's the first thing. And after that, just then go back to corporate to say, hey, do you want to do that with us in that setting? But I think that, uh, every time you develop a technology, you need to understand what that technology needs to do for someone being able to pay the amount of money that will cost when it's in the market. So I think that's the first thing I can do. And then getting users and users and validation and data and the much data you can analyze and you can put together the better in terms of attractiveness.

[00:26:53] Clara Campas: But particularly this conversation will help also to make sure you are not spending money and efforts and [00:27:00] resources towards those potential exits that would not make any sense. So again, for digital in the diagnostics and in the non diagnostic field, everyone thought for certain times we have been talking with thousands of entrepreneurs saying, no, pharma is going to acquire us.

[00:27:15] Clara Campas: And when you turn out and you spoke with pharmacy, no, no, we see them as suppliers, never as potential targets for M& A. So I think that, uh, one needs to be very clear on who are clients and who are potential acquirers. And someone will acquire you only if you are adding business and income to their corp business. And that probably it would be different type of third party.

[00:27:40] Henry Peck: Yeah, if the income is coming off the balance sheet of the [00:39:00] corporate, it's a little different to look at them as an acquisition target than as a partnership angle. And I think that's increasingly true across diagnostics, digital therapeutics, and a lot of those kind of intersection spaces in the areas where pharma currently plays

[00:27:58] Henry Peck: You talked about the IPO [00:28:00] window now being closed, some activity IPO being a very established exit strategy for companies across some of these different buckets, and I want to hear your perspective a little bit more on the IPO market now, how it's evolved and maybe continuing to evolve and where it fits in with how you're counseling your portfolio companies on opportunities to achieve liquidity properly and hopefully faster.

[00:28:19] Clara Campas: The first thing we have to do when speaking about IPOs is to understand and reflect a little bit what has been happening in the last 18 months or 24 months. I think that the COVID and post COVID hype, [00:40:00] we are now encountering ourselves in the consequences of all the things that happen at that time, right?

[00:28:40] Clara Campas: So crazy valuations in all the verticals we have discussed, including biotech. Investors aiming to do early exits by just putting the company in IPO, try to spray a little bit that nothing was going wrong until the lockup period is finished and then you run, right? But that didn't make any [00:29:00] sense. Because there are a huge amount of companies in preclinical stage with just a few products in the pipeline that did quite successfully and investors made money at that point, that was a window of opportunity.

[00:29:09] Clara Campas: The sustainability of that company in time in the public markets, for me, it was quite doubtful, and that's it. So again, people make money, fair enough, but I don't think that was the appropriate strategy when thinking about how these products could be consolidated, how these products would benefit from that business move of the IPO in reaching the market.

[00:29:33] Clara Campas: This is how it works. It's as simple as a discount cash balance sheet. So it's about when the product will get to market, what's the amount of money in each product can be done? It will depend on the impact in patient outcome in the appetite of corporates. And then you have to discount and go back. If you do certain moves that are impairing the way of these products to reach the market, sooner or later that valuation would not sustain, that pathway will not continue.

[00:30:05] Clara Campas: I think that the first part of the, um, let's say IPO or public market in life sciences ecosystem, the first months were correction. And now we just, everyone is a bit fed up of what has happening. And it's not fair because they were companies that were doing well, and now they're struggling and suffering a lot.

[00:30:27] Clara Campas: But I think that we need to learn about what happened all this time for when the window is open again. I think that the beauty of it, or the good news of it, is that no one, at least for a while, is one of the things that are not based in fundamentals. What do you have? What is the risk around what you have? What is the potential around what you have? And then depending on that, you risk money and you move forward. And I think that it might sound very plain, but I think that's the only way of doing things.

[00:30:55] Clara Campas: Investing in, in disruptive technologies, understanding there is risk associated and science can fail. But what cannot fail is operation or financial strategy in that setting. We all need to bear that in mind at this point.

[00:31:11] Henry Peck: So obviously, as we touched on a moment ago, LSI Europe 23 is coming up this September in Barcelona, Spain. And when we first started putting the wheels in motion for this event, I was introduced to Asabys and Josep by the strong presence that you have in that region, and globally with some of our partners that we'd had at previous events like Sofinnova, Gilde, et cetera. And particularly with Josep, I'll vividly remember someone introduced me, he said, you have to meet this guy, he is Mr. Barcelona. That was how it was pitched to me originally. So Josep, I'd love to hear a little bit from you first about the ecosystem in Barcelona, what's unique about that ecosystem, especially [00:13:00] for, as someone who's building a VC that is investing across Europe and U. S. and Israel, tell me about the Barcelona ecosystem particularly and what you're seeing there, what makes it special and diversified from other ecosystems that you've worked in and invested in?

[00:32:01] Josep Sanfeliu: Let me start with a joke. I remember one U. S. friend of mine 20 years ago, relevant VC in the West Coast, I cannot say his name, but someone with a lot of experience. I was working already in the pharmaceutical industry in Barcelona, Almirall, which is a mid sized pharma here in Barcelona, mid sized European wise, biggest probably in Spain.

[00:32:19] Josep Sanfeliu: And I was talking to him and I was saying, why aren't you investing in Barcelona? Why don't you come and see over the science? Because there was already a very good science, a very strong clinical practice. And he said, would you invest in Jamaica? With all due respect for Jamaica, basically, like saying, this is regarded and has been regarded for many years as a place where you have a lot of creativity, innovation, but mostly a touristic destination.

[00:32:42] Josep Sanfeliu: So over the course of the 20 years, this certainly touristic destination, which is actually the GDP is like 20% or something like that of the Catalan Barcelona region. So it's still very big. And obviously it's a wonderful city to visit. At the same time that this industry was developing, attracted a lot of talent [00:33:00] and developed a lot of internal talent. So Barcelona in the last 20 years, I started my career as a VC in 2008, 15 years ago, uh, ICIOS Capital, which is a fund which is already operating here in Spain for 15 years, that was the first fund in Spain. So that gives you a little bit of a horizon of the development.

[00:33:17] Josep Sanfeliu: The first company that's now quoted is Origen company that was founded in 2000. So, it's more or less 20 years in which this industry has been developing different players. But in the last five years, even with situations that were not easy for the city of Barcelona, which, uh, you know, that was hit by terrorism, there was a very hot debate on politics around the city, COVID obviously struck a little bit [00:15:00] this city, well, actually a lot, because it was a lot of a touristic dependence. So despite everything, that data, and I would like to just refer to Biocat or Catalonia Bio data or the Ernst & Young report that every year is released, you can still see the strength of the amount of investment and the amount of international VC investment and the amount of corporate international pharma investment in the healthcare ecosystem.

[00:34:11] Josep Sanfeliu: And you have very recent transactions. Recently, I mean last thousand days, right? You have still a lot of companies that are placing very relevant bets in emerging companies based on their science or their talent. We have companies in our portfolio from one that have received investment from U. S. VCs like NEA, European VCs like Schofield very recently, like, uh, German VCs from DITEC, not even only from the life science ecosystems like InBrain with Vsquared. So there's been a lot of traction of the investments.

[00:34:44] Josep Sanfeliu: And then you have seen recently, which is something that's now being confirming this trend, you're also seeing some amazing exits like, uh, the founder of DeepUll, which is one of our investments, that sepsis investment, was a founder and start, and after doing the whole financing cycle in 2017, roughly, he sold the company to Keogen with a very attractive and very interesting technology in diagnostics.

[00:35:11] Josep Sanfeliu: And now he's again reinvesting in a company with other two corporates, right? So that are here like Welfare or BMDA who are part of this company, and they came to Barcelona. The boards happen actually here in our office, right? So, and we're in the middle of the Gothic neighborhood where we have thousands of tourists every morning coming up and down the street, right?

[00:35:29] Josep Sanfeliu: And that is combined with the science and the metrics that I would say, which is how much capital is coming around here. You have the industry like Novartis has also joined some of our companies, Merck has joined some of our companies, and these are not established companies. These [are 10 people, 20 people companies that are in the Barcelona Science Park, in the Barcelona Biomedical Research Park, in this same building, which is a health tech devoted building, this facility here.

[00:35:54] Josep Sanfeliu: So, all the metrics tend to tell us that the years of consolidation of the academic research, the clinical expertise and excellence, also the abundance of congresses that worldwide come over here, you know, Las Vegas is a place which is popular to go for medical congresses. Paris is obviously another one. Barcelona, I believe, is the second or the third in the world. with a mobile Congress and then all the medical Congress is coming around.

[00:36:20] Josep Sanfeliu: And then the concentration and how dense is the network here between hospitals, industry, means local industry like Almirall, Grifols, Laffer, Huerfen, all this pharma, health tech, med tech. Now we have Teladoc also in Barcelona, which is a European headquarters also based in Barcelona. So all this ecosystem of the incumbents. All the [00:18:00] ecosystem of the science, where Clara was working in science in the hospital, and the reputed research lab, and the many other research labs that are publishing in peer reviewed journals with a lot of success, and all the spin outs coming from the research centers, together with the business schools.

[00:36:59] Josep Sanfeliu: Around the corner we have Esade, we have IESE, we have EADA, two or three very relevant schools, especially IESE and Esade, the very top in the European business school rankings, together with good academy and universities. And then, to your question about attracting talent, a place where you can combine a lifestyle, a Jamaica lifestyle, if you wish, where you can combine, you know, a Saturday morning breakfast, but also an inspiring visit to an old part of the town. And then, obviously, work hard and party hard. That combination, if you have to get inspired, if you have to, you know, walk in the coast just to get a bit of air in the lab and go back to the lab, that is a good condition for creativity and for productivity in the scientific tech healthcare space.

[00:37:45] Josep Sanfeliu: And then you can test everything in great hospitals. We have a lot of research going on on public good quality health university related hospitals that can facilitate better testing opportunities and other clinical activities. So, I think Barcelona is reaching to a point, so we are very happy that LSI is happening here this year. Because I think it's part of this consolidation.

[00:38:08] Josep Sanfeliu: We still need to do a lot of work, a lot of investments. By the way, all the VCs in Spain that do healthcare, which is roughly, if you add them up, asset management is like two billion. If you account for the Asabys of this world, which they're like three or four in Spain, we are all based here in Barcelona.

[00:38:44] Josep Sanfeliu: We need a lot to do yet, but tax wise, incentive wise, culturally wise, we need to work on the management teams and bringing more talent to the management teams to complement the scientific teams. There are things that we need to work on, more funding, private funding and public funding, which in Spain, by the way, public research is not yet well financed if you compare to other countries in Europe. So there's a lot of things to be done, but Barcelona is very well placed.

[00:39:09] Henry Peck: Amazing. As you said, we are so excited to be there for LSI Europe 23. And I think our global community, both those that are based in other European geographies and interested in juxtaposing some of the key geographies that we see for medtech and biotech in France and Germany with the ecosystem that you're building in Barcelona and contributing so heavily to, and our US based community, our Asia Pacific based community, our Israel based community coming over and experiencing this ecosystem for the first time with the backdrop, as you mentioned, of culture, history, tourism, a place that really supports all facets of what goes into building and scaling a successful venture and building a life around that.

[00:39:52] Henry Peck: Well, Clara, Josep, thank you both so much for joining us today. I cannot express how excited I am to have you and the Asabys team in full force at LSI Europe 23. We really look forward to seeing you all on stage and seeing you in beautiful Barcelona.

[00:40:06] Clara Campas: Thank you so much. It was a pleasure.

[00:40:08] Josep Sanfeliu: It was a pleasure, Henry, enjoy your visit to Barcelona.

[00:40:13] Henry Peck: Thanks for tuning into Emerging Medtech Today by LSI. Be sure to subscribe on your favorite podcast player so you're automatically notified when there's a new episode.

For more about LSI and the Emerging Medtech Today podcast, and to continue exploring our suite of videos, interviews, and other resources, visit emergingmedtechtoday.com and find the link in the show notes.