NLS asked Dominykas Milašius, Venture Partner at Baltic Sandbox Ventures and co-founder of Delta biosciences, about the Baltic business climate for life science startups and companies, and opportunities for investments and collaborations in Estonia, Latvia and Lithuania.
Describe Baltic Sandbox Ventures’ investments in life science companies/startups? What kind of companies are you focusing your investments on today? At what stages?
“While active since 2018 as a private accelerator, Baltic Sandbox launched its newest fund in April, Baltic Sandbox Ventures. This is the region’s first specialized venture capital fund for early-stage deep tech. With EUR 15.5 million to deploy, we are helping deep tech and life science founders to build science- and engineering-driven companies with a strong technological or IP edge. Our incubation and acceleration programs (with optional grants and/or investments) cater for pre-seed, while our seed fund helps founders at slightly later stages. Overall, our target is to deploy a third of the fund into life sciences.”
Some of the highlights include helping repatriate a Cambridge life sciences PhD, facilitating a top university spin-out, kicking off a partnership with an industrial partner in Japan, and filing a US patent.”
“Since April we have closed 11 pre-seed deep tech deals, with tickets averaging EUR 100k . Two of these 11 are in the life sciences domain – a Finnish and a Lithuanian company. We have also run three incubation and acceleration programs, with one specifically for the life sciences innovators. These programs have already demonstrated their value for over 40 teams. Some of the highlights include helping repatriate a Cambridge life sciences PhD, facilitating a top university spin-out, kicking off a partnership with an industrial partner in Japan, and filing a US patent.”
What are some of your basic criteria to invest capital in a company? What factors do you consider especially important?
“We are a deep tech fund. That means, we are placing our bets not on the current financial signals like the MRR, but on the company’s scientific/technological edge and the robustness of the IP portfolio. The team composition is also extremely important at the earliest stages. We look not only at the credentials, but also the co-founder dynamics and their ability to adapt with the company’s evolution. We don’t want to force scientists to become managers, and vice versa, so we are always looking for (or helping find) interdisciplinary compatibility.”
“Finally, we recognize that deep tech requires time and effort – so we look at the team’s history, how they navigated building in a tough environment, and how they built up resilience and strategic patience as a team to manage the R&D-product risk, alongside the PMF risk.”
How would you describe the life science industry in the Baltic countries? For example, what stands out, specific areas of strengths, challenges, differences between the three countries, etc?
“We see the overall global boom of innovation in the life sciences sector – mostly the recently unlocked ability to program biology and chemistry as a programming language. On top of that, the Lithuanian life sciences sector is experiencing a renaissance. We have a generation of young founders innovating in domains like gene editing, molecular biology and single-cell analysis, microfluidics, and drug discovery – learning lessons from the successful acquisition of “Fermentas” by Thermo Fisher. We are inspired by the foreign investor-led rounds by Atrandi Biosciences and Litilit, and in the same spirit seek to support growth for all life sciences startups in the Baltics.”
We have a generation of young founders innovating in domains like gene editing, molecular biology and single-cell analysis, microfluidics, and drug discovery.”
“Furthermore, our universities have become trusted partners in international research efforts. Examples include Vilnius University Life Sciences Center, establishing a European Molecular Biology Laboratory partnership institute, and attracting world-class gene editing PIs. Lastly, since 2019, Lithuania has been experiencing a net positive migration for the first time in recent history. After COVID, we see a whole generation of world-class diaspora scientists returning to, or starting cooperation with, the Baltics. Our fund is supporting this reverse brain drain – we are helping some of these repatriates establish businesses through our incubation and acceleration programs.”
What are the unique strengths of the Baltic life science industry that can be leveraged for international expansion?
“We are an emerging life sciences hub, on a mission to prove its world-class capability. That means close proximity to all key partners, lean management, faster iteration cycles and better ROI when it comes to talent acquisition and R&D. Our ecosystems are also more likely to be open to experimentation, making us a perfect match for foreign partners.”
Our ecosystems are also more likely to be open to experimentation, making us a perfect match for foreign partners.”
“Hence, we’re glad to observe and contribute to the fact that the Baltics life sciences ecosystem is also strengthening its connectivity to other key innovation ecosystems – be it our Scandi neighbors, or the likes of Basel, Boston, Oxbridge, Seoul or Taipei.”
Read more: Life Science in the Baltics
How would you describe the Baltic capital landscape, especially for life science companies for example, when it comes to access to VC, governmental support, etc?
“Our analysis indicates that around a quarter of all European VC capital deployment has been dedicated to deep tech, compared to a historic 10% in the Baltics. As the first specialized deep tech and life sciences fund, we see that deep tech founders feel under-supported, so we want to bridge this gap, helping life sciences founders build meaningful companies. We are happy to see that more regional VCs are also venturing into this space, making it easier to fundraise for life sciences in the early stages.”
We all identify life sciences as a strategic sector for Lithuania and are on a coordinated mission to support science-led businesses and prominent academic spin-offs, alongside a plethora of private initiatives working in this domain, hence our fund’s strategic support for events like Life Sciences Baltics 2023.”
“When it comes to the public sector, we’re glad to see that the EU funding for R&D is almost on a par with the US, and that Baltic life sciences founders are increasingly adept at managing hybrid financing sources. Plus, the thinking of the local government agencies corresponds to our own. We all identify life sciences as a strategic sector for Lithuania and are on a coordinated mission to support science-led businesses and prominent academic spin-offs, alongside a plethora of private initiatives working in this domain, hence our fund’s strategic support for events like Life Sciences Baltics 2023.”
What would you say are the biggest challenges right now for Baltic life science companies in their efforts to grow and internationalize?
“First, the ability to experiment with high-risk/high-reward R&D at the early stages. That’s why our incubation program provides a space and infrastructure to test out some of the ideas. Second, lack of access to the most pertinent industry problems and the ability to source and iterate on the pilot feedback from potential clients, as well as limited access to medical and genomic data. That’s why our fund has a partnership arm that works to build a platform for collaboration with industry and the public sector.”
Brilliant scientists should not deal with admin – that’s why we’re building up a matchmaking service and providing centralized support to our portfolio.”
“Third, no standardized spin-out process. Through our incubation programs, we are working with a few university tech transfer offices to help establish a playbook that’s friendly to founders, the university, and future investors. Fourth, lack of innovation managers. Brilliant scientists should not deal with admin – that’s why we’re building up a matchmaking service and providing centralized support to our portfolio.”
Describe what different kind of services the Baltic Sandbox can help startups with?
“We take an active role in helping founders, and hence run both incubation and acceleration programs (with funding) to funnel down the best entrepreneurs to our investment in seed rounds. These programs can help with different KPIs – including, but not limited to additional fundraising, sourcing co-founders and talent, IP protection, tech transfer deals, POC and validation experiments, complex sales support, or hybrid financing. Most of our partners are also entrepreneurs, so we help where we can.”
Could you give us an example of a life science startup that you have helped and describe their journey so far?
“One startup we are privileged to work with is VitalSigns – a Finnish company developing a next-gen stethoscope and data analysis platform for better diagnostics. The company is currently seeking CE marking and setting up a sales pilot to validate the market need, in addition to continuing R&D and improving the ML engine.”
“We are supporting the founders with strategy development as well as further fundraising.”
Are you collaborating with any Nordic countries/companies/institutes, and if so, what are you collaborating on?
“Nordics is an important geography for us. We’re proud of our investment into VitalSigns and are looking to expand our collaboration with our neighbors around the Baltic Sea – both in terms of investments and R&D partnerships with academia.”
We are looking to expand our collaboration with our neighbors around the Baltic Sea – both in terms of investments and R&D partnerships with academia.”
“We are also looking forward to welcoming other Scandi VCs to Vilnius for the Startup Fair, and hopefully collaborating on more deals in the very near future.”
This interview was originally published in NLS magazine No 03 2023, out September 2023
Featured photo of Dominykas Milašius (Baltic Sandbox) and aerial view of Vilnius, Lithuania (iStock)