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Exploring venture studios: can 2021’s hottest entrepreneurship trend work for Bulgaria’s life science ecosystem?

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Life sciences startups have always been on a mission to improve human health through innovation. The global impacts of the COVID-19 crisis have made the importance of that work clearer than ever. For startup leaders looking toward the future, it’s important to understand how they can fund their work.

Unfortunately there is a lack of VC funds dedicated to deep-tech companies not only in Bulgaria but also all the region of SEE and Western Balcans. That pushes the companies to emigrate abroad and take the innovation, IP, entity, with them by leaving the local ecosystem without best stories to reveal.

In a bid to find a solution to the problem and find an efficient working model, Bulgaria’s Health & Life Sciences Cluster, supported by Trending Topics SEE and Sofia Tech Park, recently held an online discussion dedicated to “Venture Build Models in Life Sciences”. The panel was held as part of an initiative to set up Bulgaria’s first BioCenter facility and position the country as the R&I heart of Eastern Europe.

A working solution

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“We reviewed the different models worldwide and found a solution and a best practice coming from the UK. The huge economic crisis in 2009 pushed their government and life sciences ecosystem to think of a new model called venture build studios. So we decided to start a series of events with key stakeholders from the local ecosystem and international experts with a great know-how”, commented Kristina Eskenazi, Chair of the Health & Life Sciences Cluster. “As part of our first event, dedicated to the role of venture building in ecosystem development and economic growth, the audience had the chance to draw on the experience of Alper Celen, the founder of Enhance Ventures – a venture studio specializing in online vertical marketplaces in the Middle East ,North Africa, Pakistan, and Turkey.”

An inside look into venture build studios

“We at Enhance believe that before designing a startup studio, one has to first answer the fundamental question: what is the startup problem one is trying to solve with the startup studio model?” Mr. Celen said during the panel. “By leading with fresh approaches and ideas, venture studios effectively combine the disruptiveness of a startup with the necessary stability of a team and resources to build companies that require decade-long roadmaps before profitability and deft maneuvering of public and private opportunities.

Аccording to a White Paper report by Enhance the startup studio model involves a central organization that starts the venture and provides resources in at least its early stages to reduce the risk and costs. The model has many successful examples mostly from the US and Europe and shows amazing promise as it matures. Also known as the “venture builder” model, it aims to build and support startups under one roof to be able to provide extra human capital at the earliest stages of development when it is needed most. 

From Germany, to Spain and UK, here are the top 50 venture builders in Europe in 2021

According to “Disrupting the Venture Landscape” report by the Global Startup Studio Network (GSSN), venture studios exist in the space where great teams of world-class talent and vetted ideas collide. They are creating the world’s next generation of industry-shaping companies.

Bringing startups to solve the world’s most pressing challenges

The startups coming out of studios have a unique composition. These companies solve the world’s biggest problems with the world’s best entrepreneurs. Because of this, the success of these startups is unprecedented. Some 84% of startups coming out of studios go on to raise a seed round. Of those startups that make it to the seed round, 72% of those ventures make it from seed to Series A, compared to traditional startups in which only 42% of ventures that get to seed make it to Series A. Ultimately, 60% of all companies created out of studios make it to Series A.

Strategic vision and focus on I&R in Bulgaria for 2021-2027 program period 

During the event, Mr Martin Danovsky, head of Bulgaria’s State Agency for Research and Innovation, pointed out that the country has clearly stated its ambition for economic growth based on innovation and science, promising help to synchronize all key local projects in this area, as well as to identify instruments for their financing. 

There is a requirement for a systematic approach that can link academia, business and investors for building a sustainable new R&I ecosystem, he added, citing the new Petascale SuperComputer as one example. “It is great that one of Europe’s eight supercomputers will run in Sofia, by the way the third one in Bulgaria , but if we don’t have a model for collaboration with the business and academia, it will be useless. Unfortunately so far, the ecosystem that is supposed to support innovation is fragmented, which prevents the efficient investment of public funds.The purpose of the establishment of the Agency is to coordinate public policy to support innovation and technological development.” 

Does Bulgaria have the resources for venture build studios?

Bulgaria has a large number of qualified researchers, low-cost operations, strategic geographical positioning, and a strong ecosystem.

Data from the Health & Life Sciences Cluster shows that in the country there are:

  • 128 medical centers in Sofia engaged in clinical research
  • 15 000 students in the field of healthcare, medicine, pharmacy and dentistry
  • 1 600 students attend biotechnology and biology programmes
  • 650 startups and scaleups 
  • 15,000 employed by these companies
  • 15% of the startups are deep tech
  • 23 universities, 100,000 students (42,000 in STEM), 63 research centres and independent software schools and 20 private software academies
  • Over 27,000 pupils in Sofia, in 1st to 12th grade currently take classes in entrepreneurship.

Model to bring additional value to Bulgaria

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Investment, nurturing the best ideas, spinning out and venture building from academia and centres of excellence, faster ecosystem development, and economic resilience are only part of the benefits that Bulgaria can take advantage of.

Panel moderator Mr Martin Shiderov, who leads the healthcare and life sciences sector for the investment services team at Ernst & Young in London, pointed out the best know-how, coming from the UK. “The benefits are substantial: pipeline development, leveraging capital, more efficient investment, building the right teams from the outset, and offering a differentiated strategy to portfolio companies and investors,” he said. “Sharing the resources, processes, expertise, vision and culture is very important particularly for the biotech space, because the risk is pretty high and the timelines are very long. The good examples show the importance of patient capital.”

+++Martin Shiderov: SEE will never be another ‘Golden Triangle’, but can build its own identity and offer differentiation to investors+++

According to Vladimir Danailov, Fund of Funds CEO, the venture build model is applicable for Bulgaria.

“We have around 15-16 venture capital funds, so Bulgaria is now at the stage to further stimulate and intensify the pipeline development and strive for more efficient investments,” he said. “In 3 to 5 years, I expect a lot of lessons learned and applied, much more good ideas on the market and internationally scaled, and applied-science approach – that means stronger collaboration between science and tech companies for more sophisticated products with successful commercialisation. Тhere is need for a more significant pipeline in order to develop the ecosystem,” he added.

Mapping the Bulgarian health & life sciences ecosystem

Kaloyan Ratchev, managing partner at Trending Topics SEE, co-founder of AI Cluster Bulgaria and CEO of Vangavis, announced a new partnership with the Bulgarian Health & Life Sciences Cluster to support building of a positive international image of the local life sciences ecosystem and provides opportunities to share the good stories.

In a bid to bring a comprehensive picture of the social & life sciences landscape, the two organisations will implement a mapping of the ecosystem, the first of its kind in the country, and plan to start working on this project in early May 2021.

“I have always worked on connecting different innovatie ecosystems. For sure we will follow this open innovation ecosystem approach”, said Mr Rachev. “Europe needs science-based innovation. I think that the first important step is to educate scientists how to make a transfer from their research to the market.”

Trending Topics SEE was media partner of the event.

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