The huge funding gap for European biotech is structural. European institutional investors like pension funds allocate only 0.02% of their balance sheets to venture, compared to 2% in the US. This factor-of-100 difference creates a major hurdle for the ecosystem's ability to retain its champion companies.
High-performing European biotech VCs struggle to attract institutional capital not because of poor returns, but because the diligence on small funds is inefficient for large pension funds. They prefer writing larger checks to bigger funds, creating a structural barrier for smaller, specialized VCs to get funded.
The biotech venture model is built on syndication, not competition. As a drug progresses, capital requirements balloon to hundreds of millions for late-stage trials, far exceeding any single VC's capacity. This structural reality forces firms to co-invest and partner throughout a company's lifecycle.
Europe's decentralized biotech ecosystem offers a major operational advantage over hubs like Boston. Lower competition for talent, lab space, and clinical trial sites allows startups to operate at 50% of the cost, coupled with pre-money valuations that are often 40% lower, creating significant capital efficiency.
Forbion's success stems from its diverse team, which goes beyond typical MDs and PhDs. By integrating partners with backgrounds in banking, physics, and finance, the firm evaluates deals holistically—assessing not just the science but also deal structures, risk mitigation, and exit strategies like M&A and IPOs.
Forbion identified an arbitrage: promising biotech assets in China whose originators lacked global development expertise. Their strategy is to create new Western companies, in-license these assets, and install an experienced team to unlock their "rest of world" value, a model proven by a billion-dollar exit.
Forbion mitigates risk by repeatedly backing the same successful management teams. After an exit, they often fund that team's next venture. This "founder recycling" strategy leverages proven operational chemistry and execution ability, as seen with the teams behind Gyroscope, IOLOS, and Ferdiva.
Forbion's internal culture is modeled on Dutch collectivism, where hierarchy is downplayed. In deal flow meetings, everyone from junior analysts to senior partners is encouraged to contribute. This prevents a "prima donna" culture and ensures decisions are based on pooled intelligence, not individual deal-makers.
A finance background in a science-heavy VC can be an asset. It forces a focus on translating complex science for investors and enables a higher-level perspective on portfolio construction. This helps avoid 'falling in love with the science' and prevents over-concentration in hot areas, ensuring a balanced fund.
The coalition's core mission is to prevent the exodus of successful biotechs to the US. By building a stronger capital market, they aim to keep champion companies like Argenx headquartered and operating in Europe, ensuring economic value, market capitalization, and tax revenues benefit the region, not the US.