Lund April 3, 2020
Startup companies in life science have crucial innovations that can reform health care of the future. Efforts are needed now to save these – for Sweden – strategically important companies from bankruptcy during the coronavirus crisis.
The economic crisis that is coming in the wake of the Covid-19 pandemic is hitting life science startup companies hard – innovation companies that had financing challenges even before the crisis. Now venture capital is on hold. If Sweden wants to continue to be a world leader in life science, initiatives are needed.
“Not all companies in Sweden will survive this crisis, which is incredibly sad on a human level. But, if you just look at startup companies in life science, it is important for all humanity,” says Ebba Fåhraeus, CEO of SmiLe Incubator in Lund.
SmiLe Incubator helps new companies convert their ideas into reality in fields such as eHealth, diagnostics, medical engineering and pharmaceuticals. The team possesses a total of 250 years of professional experience from the life science industry and a large network of contacts.
“Right now, we’re spending a considerable amount of time on crisis management and trying to understand the government’s measures. So far, they haven’t been directly applicable to our category of companies, many of which do not yet have any employees, products or revenues. We are pursuing a positive dialogue and hope that it will result in effective initiatives,” says Ebba Fåhraeus.
In this particular industry, product development takes a long time and requires large investments. In crises like this one, risk appetite declines among investors. If companies go bankrupt, patents are lost. Then Sweden loses the new medications and diagnostic methods that would have been possible to develop, based on extensive research. And it will be difficult for us to catch up and attain equal opportunities in the foreseeable future.
“It’s important not to waste the funding that the Swedish government and the EU have already provided. We need to look at what is most worth protecting from a strategic perspective,” says Ebba Fåhraeus.
Thanks to venture capital, these companies can be run, developed and generate ideas. Over the past five years, SmiLe companies have contributed SEK 695 million in income tax to Sweden.
“Anyone who has a suggestion for how we can save these companies is welcome to contact us, for the sake of our future,” says Ebba Fåhraeus and continues:
“There is a proposal for a government action package that would make a difference for Swedish innovation companies which those of us in the innovation system are promoting through our channels.”
SmiLe would like to highlight the following points in the proposal as a solution for the lack of venture capital for life science companies:
1. Give Vinnova more public funding to support innovation companies by opening more and larger calls for proposals, and partly as verification funds for the incubators, for allocation to suitable companies so that they could continue to make progress in their development.
2. Increase Almi Invest’s cash for convertible loans and venture capital without requiring co-investment, and increase Almi Företagspartner's loan fund for conditional loans to innovation companies.
SmiLe enables a future of better healthcare by building a community of world-class life science innovators. Located in Medicon Village, a life science cluster in Lund, Sweden, SmiLe facilitates startups looking to develop next-generation healthcare and life sciences technologies. By bringing together life-science entrepreneurs, investors, scientists, the university and the municipality, we create an attractive, forward-thinking atmosphere that enables creativity and smart science to thrive. Being a not-for-profit organization gives companies the security of knowing that we work only in the interests of the entrepreneurs we sponsor.