New Venture Capital Fund Eyes Latin American Science Startups

Ken Parks, Bloomberg News

A healthcare worker prepares a dose of the Sinovac Biotech Ltd. Covid-19 vaccine at a clinic in Montevideo, Uruguay, on Monday, March 1, 2021. Uruguay starts its Covid-19 vaccination program with 192,000 doses of the Sinovac vaccine. , Bloomberg

(Bloomberg) -- The backers of a new venture capital fund that aims to finance startups in Latin America focused on life sciences are bucking a funding crunch by tapping family offices and wealthy investors.

Investment banking firm Ficus Advisory and scientific research center Institut Pasteur de Montevideo expect to close its first funding round for $10 million by mid-June with about 15 European and Latin American investors, Ficus Chairman Paul Elberse said. Lab+ Ventures LP has commitments for more than half that amount so far, he said.

“First time funds have a tremendous problem raising money in these very volatile markets. I think we are an exception in that sense,” Elberse said in an interview from Montevideo.

Elberse expects to close a second funding round for $15 million in mid-2024.

American venture capital funds raised just $11.7 billion in the first three months of 2023 due to rising interest rates and inflated company valuations, according to a report by Pitchbook-NVCA Venture Monitor. Those same factors sent venture capital deals in Latin America plunging 50% year-on-year to $7.8 billion in 2022, according to data compiled by trade group LAVCA.

Latin America’s fintech sector has received billions of dollars in venture capital in the last decade, spawning publicly traded companies like payments platform Dlocal and online bank Nu Holdings. Lab+ Ventures is a bet that private capital can kick start a similar boom for Latin American life sciences startups developing everything from novel cancer treatments to livestock vaccines.

The US-based fund has its operational structure and special purpose vehicles in Uruguay. Lab+ Ventures has chosen four Uruguayan scientific teams for seed funding and plans to invest in eight more projects from Latin America or even outside the region, Institut Pasteur de Montevideo executive director Carlos Batthyany said.

The research center has already spun-off several startups in recent years, including Uruguayan pharmaceutical company Eolo Pharma that is conducting clinical trials in Australia. It will take a 10% stake in Lab+ Ventures companies that use its facilities.

“The partnership of a research organization and venture capital fund to monetize the institute’s science is a very interesting match that facilitates” fund raising, Batthyany said.