Photo: Neurescue team. Habib Frost is second from the right

The Next Life Science Successes Are Being Waylaid by Funding Constraints

Although the Danish life science ecosystem produces a wealth of viable product ideas, there is a huge disproportion between the possibilities and the capital available to convert them into reality.

The computer-aided aortic occlusion catheter developed by the Danish start-up Neurescue is the first of its kind in the world. It is a sophisticated balloon that can be safely inserted into the blood vessel of a cardiac arrest victim without the need for imaging. And Neurescue hopes it can help more than 1 out of 10 people to survive a cardiac arrest, which is the current statistic.

Habib Frost, founder and CEO, Neurescue

After four years of development and 600 tests performed on the product, the company has secured more than 20 patents and is now ready to launch their first product to the market. Even though four years to market is relatively fast, when you’re developing a highly advanced, innovative medical product in a highly-regulated space, the road to market could have been faster with access to more capital.

According to Habib Frost, the founder and CEO of Neurescue: “You often have to choose between doing it good, fast, or cheap – and you only get to pick two. We have always prioritised safety and quality, so we could not do as many things as fast as we necessarily wanted from an international standpoint.”

Right now, ­there is a screaming ­disproportion ­between all the ­great opportunities in the eco-system and the venture ­capital available
Stephan Christgau

With the three rounds of funding secured from life science business angels and equity-free funds – e.g., €1,6 million from the European Commission Horizon 2020 and investments from the Danish Innovation Fund – Neurescue is product-ready and are moving towards a successful launch. Still, the company represents one of the biggest challenges the Danish ecosystem is facing: The number of talented people with good ideas isn’t matched by the amount of capital needed to reap their full potential.

Greater potential than yield

Stephan Christgau was one of the founders of Novo ­Seeds back in 2007 – a venture fund for life science start-ups initiated by Novo. Recently, when he left Novo ­Seeds it was to establish a new Nordic life science venture fund, which he thinks is crucially needed in the Nordic funding landscape:

“Right now, there is a screaming disproportion between all the great opportunities in the ecosystem and the venture capital available. More and more compelling opportunities are emerging, which obviously creates an even bigger demand for venture capital.”

Research from Denmark’s universities is increasingly commercialized – which is what makes a difference for patients in the end. After all, a discovery or a new invention only becomes a product that can benefit patients if it is developed. And while most start-ups require capital to make their ideas reality, that is even truer for life science start-ups.

New ideas often come from young people with limited financial resources who need external funding from ­investors to realise their ideas
Ricki Boye

Christgau explains: “Life science start-ups require deep expertise and a wide range of competencies and networks to succeed. In turn, this sets demands for investors. If they are investing in a new cancer drug, they need to understand the medical candidate, how to test it on patients, how to sell it, and so forth.”

The wrong capital can kill a start-up

Ricki Boye, a partner at the lawyer firm Bach Advokaterne, knows just how crucial it is for a start-up’s success to secure the “right” investors from the beginning. In his own words:

“New ideas often come from young people with limited financial resources who need external funding from investors to realise their ideas. And unless they know the funding landscape beforehand, it can be hard to put together a group of investors who can help the company grow now as well as in the long run.”

Stephan Christgau, one of the founders of Novo ­Seeds

Although there is investor money in the market, for life science start-ups it can be hard to find investors who understand their technology and have the necessary patience to invest in the industry. In this domain, regulatory requirements are significant and time-consuming, compared to other tech start-ups. If a team decides to take on an investor who doesn’t know the landscape, it can backfire later on, Boye explains:

“There are multiple business angels who are ready to jump into life science, but it can be dangerous to get investors aboard who don’t know what they’re signing up for or understand the risk involved.”

Typically, life science start-ups need a lot of money before their product is ready for market. Part of the challenge is finding knowledgeable investors who can help the business grow without taking so much equity early on that it becomes impossible to raise bigger rounds down the road.

Boye points out: “Founders don’t always understand the extent of what they’re taking on with investors. Once they take in outside money, they also accept giving up some of their power. The goal is to leverage the founders’ right to run and develop the company and the investors’ desire to safeguard their investment. If they are not aligned it can be devastating to the development of the company, as the founders lose focus on the project as they spend their time engaging in discussions with investors. Overall, this can derail the company before it’s even started.”

The Nordics need more life science VCs

Start-ups need all the capital opportunities they can get – from soft funding and grants to business angels and family offices. That is especially the case in their early development phases. On this point, Christgau is careful to point out that start-ups require better access to competent venture capital once they are prepared to develop and commercialise their products. In this way, venture capitalists can participate with larger financing, in addition to bringing domain knowledge and commercial expertise to the table:

“In all the Nordic regions there’s only 5 dedicated life sciences investors. And as more people from the industry succeed and start thinking more internationally, the lack of capital is really becoming the limiting factor.”


Ricki Boye, partner, Bach Advokaterne

In fact, even when life sciences start-ups attract international venture capital, Christgau thinks it’s crucial to have Nordic funds. His rationale is that foreign funders will want to see a local investor if they are to invest as an international syndicate, or alternatively they may consider moving the start-up to their own region.

More capital is required for a new Novo Nordisk

Neurescue is ready to generate clinical evidence for the commercially-relevant clinical pathways of their device. Consistent with this, they are preparing for a larger investment from venture capitalists next year – most likely this will include targeting foreign investors.

The group’s founder, Habib Frost prefers not to make any predictions as to whether a foreign investment will mean that Neurescue will be sold to a bigger company, or that they will establish themselves as a successful company in Denmark. One thing that he is clear on is that Denmark needs more capital if more start-ups, in general, are to stay in the country. The leap from a start-up with a finished product to an established company which sells globally is simply too big of a stretch without more venture capital. In Frost’s words:

“For a small Scandinavian start-up like us, it’s very difficult to sell and distribute in the US without a larger partner. It requires much more capital to establish distribution to the bigger markets yourself, and we do not see that as the right pathway for us. If we want the next Novo Nordisk and Coloplast to stay in Denmark, we need larger investments. Right now, the landscape indirectly promotes early exits after development.”

Frost remarks that the Nordics are very good at early-stage research and development, but he also hopes for more start-ups to become sustainable companies headquartered in Denmark:

“Danish start-ups get a lot of respect internationally, as we have a large talent pool and can come a long way with small investments. But we are ready to take off as a ­world-leading life science nation. However, in order to ­really take off and substantially increase our growth, more capital is needed.”