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12:00 AM
 | 
Mar 31, 2014
 |  BioCentury  |  Finance

LSP's steady hand

How LSP has survived 25 years as European life sciences VC

When LSP-Life Sciences Partners launches a new healthcare venture fund next year it will stick to a strategy that has yielded 12 exits in the past 18 months - early stage, European drug development companies. The recent exits also highlight the firm's decision to focus on companies ripe for trade sales and to diversify its portfolio through a trio of complementary funds.

Since its beginnings in 1988, LSP has raised a total of $1 billion in eight funds and has invested in 75 private companies. There have been 18 IPOs and 25 trade sales across seven venture funds.

Over the years, the firm has added three complementary funds, with one each focused on agbio, public companies and health economics plays. The latter are companies with products that produce demonstrable savings to the healthcare system.

According to LSP's Joachim Rothe, maintaining a consistent team and strategy has helped the firm keep its gross internal rate of return (IRR) above 25% since inception across the first six of LSP's private company funds. The exception is the Health Economics Fund, which closed this year and hasn't yet had an exit.

All 12 partners have been working together for at least 10 years. "We have hardly ever had any attrition, with the only changes being additions due to the growth of the organization," Rothe told BioCentury.

What's more, he said, "there haven't been any wild changes in strategy over the past 25 years. We have basically stuck to what we believe we are reasonably good at."

That strategy has been to invest about 60% in drug development plays, with the other 40% split evenly between diagnostics and medtech.

Rothe said about one third of investments are first made at seed stage; one third at the early venture round stage, such as series A or B rounds; and one third in companies in late-stage development.

About 90% of LSP's investments are in Europe, and LSP typically is the co-lead investor in most of its deals.

Rothe said the firm's new fund, LSP V, has a target of €150 million ($207 million) and...

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