Interview: Roberto Matta

Can you describe the impact of global economic trends on Evoleen’s investment strategies and portfolio management?

Global trends exert a powerful influence on investment strategies and portfolio allocation, and Evoleen, as emerging manager in the health tech investment space, is no exception.

Macroeconomic factors include rising interest rates, which can make venture capital investments less appealing, and inflation that raises operating costs for health tech companies. Trends in venture capital funding are also crucial since a general decline in VC funding influences health tech. Societal factors involve an aging population, increasing healthcare demands and a rise in chronic diseases needing innovative solutions. The digital transformation of healthcare offers new opportunities, and AI is significantly driving investment.

In addition, sector-specific elements have a significant impact. It is imperative for health tech companies to navigate the regulatory landscape if they wish to bring their products to market. Compliance with regulations is a prerequisite for obtaining approvals and gaining market access. Changes in reimbursement policies can affect business models. Regulatory changes can create both challenges and opportunities, and the shift towards value-based care demands technology that improves patient outcomes and reduces costs.

What types of investments does Evoleen target?

Transformation of the healthcare industry is actually a secular trend. Technology is a powerful force playing in multiple directions, from improvement in diagnostics and therapies enhancement, to increase productivity and data management. Key areas of interest include mental health, chronic and cardiac diseases, geriatrics, gastroenterology and oncology.

Evoleen makes strategic investments in innovative global pharmaceutical companies to shape the future of the healthcare system and generate value.

Capital is deployed primarily in Switzerland, where Evoleen leverages the holding company established network with leading healthcare and pharma players, as well as hospitals, insurance companies and universities. This provides a natural access to deal flow and positions Evoleen as a dedicated actor in the domestic market.

What challenges do Evoleen foresee in the venture capital industry, and how does it plan to navigate them?

Evoleen faces a range of challenges within the industry, as do any venture capital funds. Economic downturns, geopolitical instability and fluctuations in the financial markets can significantly impact the availability of capital and the valuation of portfolio companies. The pace of innovation in health tech is rapid, and it can be challenging to identify and invest in the most promising technologies. Moreover, the venture capital industry is competitive, and securing access to high-quality investment opportunities can be tough. Achieving successful exits, such as acquisitions or IPOs, is also vital to match expected returns.

Evoleen navigates these challenges emphasising its team's extensive knowledge of the healthcare industry and its ability to identify promising health tech innovations. Collaborating with established players in the healthcare and technology sectors provides access to resources, expertise, and market opportunities. By working closely with its portfolio companies, Evoleen aims to create significant value and drive successful exits.

What tips would you give to a management team looking to launch VC alternative investment fund in Luxembourg?

The launch of a VC alternative investment fund in Luxembourg is a strategic move, given the country's position as second largest fund’s domicile in the world and favourable regulatory environment.

As a first step, it is important to familiarise with the various fund structures available, such as the Reserved Alternative Investment Fund (RAIF), Specialised Investment Fund (SIF), and Special Limited Partnership (SCSp). Each has its own regulatory requirements and investor eligibility criteria.

It is also essential to build a strong network of service providers, as there are many decisions to be made during the setup process. Selecting a reputable Alternative Investment Fund Manager (AIFM) to oversee the fund's operations and compliance, partnering with an experienced fund administrator to handle day-to-day operations, and ensuring excellent legal and tax advice are all key elements. Choosing an experienced auditor with Luxembourg-based funds is also fundamental.

Finally, it should be noted that budgeting may present a significant challenge, particularly for those undertaking this process for the first time. It is indeed imperative to have a comprehensive understanding of all costs and to establish a realistic timeframe for the initial closing, while effectively managing the financing gap in the interim.