The preferred investors of innovative European start-ups are…

The European Patent Office published a study on Thursday, January 16, to help start-ups identify the investors most sensitive to patent filings. This investor mapping also provides information on the financing gap for start-ups in Europe compared to the United States.

Who are the investors behind European innovators? To answer this question, the European Patent Office analyzed the portfolios of more than 6,100 investors active in Europe between 2000 and 2023 and having made at least one investment in a start-up since 2020, in a study published on Thursday, January 16. At the same time, the organization that issues European patents also listed more than 8,000 investors who finance American start-ups in order to compare the two ecosystems.

"This study shines a spotlight on this category of investors who finance start-ups filing patents. These companies, deeptechs in the most extreme case, are not seeking to exploit an existing technology. They aim to bring new technology to the market. They are generally more production-oriented, create more jobs and have higher financing needs for their development. Their investors must be able to understand the technology and analyze their intellectual property,” explains Yann Ménière, chief economist at the European Patent Office, to L’Usine Nouvelle. 8% of investors have more than 50% of innovative start-ups in their portfolio

The study thus measures the percentage of companies with patents, or at least in the process of applying for a patent, in investors’ portfolios. It shows that 88% of active investors in Europe have supported at least one start-up in this situation in recent years. This support can take various forms, such as an equity injection, a grant or even a debt raising. But only 40% of them have more than 20% of “patented” start-ups in their portfolio and 8% manage to have more than 50%.

The European Patent Office goes further in its "mapping" of investors sensitive to innovative start-ups by ranking the 25 largest players, private or public, in Europe according to their exposure to "patented" companies. By taking into account the number of start-ups supported, public investors monopolize the best places in the ranking. Public institutions very present in the first rounds of funding.

In first place is the EIC fund, the venture capital fund of the European Innovation Council, which has financed 508 companies, more than 70% of which have filed patents, according to calculations by the European Patent Office. It is followed by the European Innovation Council itself, which is more involved in seed funding and whose portfolio comprises 45% of patented companies.

The Swiss acceleration programme Venture Kick, financed by a private consortium, completes the podium. It is the only private investor in the top 15, with the British investment company BGF in twelfth place. Rounding out the top 5 are two instruments of the European Union's Horizon Europe research framework programme, with EIT Health in fourth place and the Eurostars programme in fifth place. National public investors such as Bpifrance, High-Tech Gründerfonds in Germany, Innovate UK in the UK and Innovation Norway in Norway are also very well positioned: between 20% and 40% of patented companies are in their portfolios.

In the top 25 of the largest investors in terms of amounts injected into innovative start-ups, the European Investment Bank stands out with 55% of its portfolio made up of patented companies. The European Innovation Council remains second, while Bpifrance is the only other public investor to appear in the ranking, in sixth place. The rest of the ranking is occupied by private investors such as BlackRock, the Canadian pension fund CPP Investments and the private equity fund Eurazeo. Supernova Invest stands out in energy

Other investors are more specialized by sector. The Swiss and Norwegian BioMedPartners and Hadean Ventures funds are among the most active investors in innovative health start-ups, with almost all of the companies in their portfolio filing patents, closely followed by Inserm Transfert Initiative, the venture capital fund of the National Institute of Health and Medical Research.

In energy, the Swedish Energy Agency, a government entity, is the largest investor in innovative energy start-ups, ahead of the generalist EIC fund and the venture capital fund from CEA Supernova Invest, which have nearly 80% of companies involved in patenting activities in their portfolio. A deficit of private investors in large funding rounds in Europe

The Singaporean fund Clay Capital leads the way in the agri-food sector, ahead of the EIC fund again and the French venture capital fund Sofinnova Partners. The European Innovation Council's venture capital investment vehicle has the highest exposure to patented transport companies, ahead of French venture capital fund GO Capital and Finnish-based Nordic Ninja VC.

The European Patent Office study also confirms significant funding gaps between Europe and the United States. "While investors [with at least 20% of companies in their portfolio involved in patenting activities] finance a comparable number of companies in both regions, American companies receive much higher median funding" from these investors, the study illustrates. This median investment is 960,000 euros in Europe, compared to 7.7 million euros across the Atlantic.

In general, the study shows funding gaps to the detriment of Europe for private investors with strong exposure to patents, in the largest rounds of funding and in cutting-edge technologies. "The development of this segment of investors with skills in technology and intellectual property is still what Europe lacks," concludes Yann Ménière.