Mubadala Capital puts faith in biotech startups

August 16, 2024, 3:47 AM

Mubadala Capital has been focusing its investments in medicine discovery and biotechnology, among other sectors

Mubadala Capital has $24bn AuM
Strong focus on US investments
11 of 15 deals were VC agreements

Abu Dhabi’s Mubadala Capital has made early-stage investments into three US biotech startups this year, taking advantage of a broader decline in company valuations to buy into the fast-growing sector.

Biotechnology uses living organisms to make products, often pharmaceuticals. There are nearly 7,600 biotech-based drugs in development in the US according to the Biotechnology Innovation Organization.

Mubadala Capital, the asset management subsidiary of sovereign fund Mubadala Investment Co, participated in early-stage investments into Seattle cell therapy specialists Outpace Bio, New York’s Metsera and California’s Capstan Therapeutics, data from PitchBook shows.

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Combined, these deals – which include other investors – were worth $617 million, PitchBook estimates.

Early-stage valuations remain below 2021 peaks, according to venture capital firm Aurelia Ventures.

The biotech investments are tiny compared with the deals that Mubadala Investment Co does itself. Yet Mubadala Capital’s remit is to “address smaller or riskier opportunities”, says Diego López, managing director at Global SWF, the consultants.

Biotech remains in its infancy, although the US market is projected to grow at a compound annual growth rate of 12.5 percent to be worth $1.8 trillion in 2033, up from $552 billion last year, Vision Research Reports predict.

Mubadala Capital has made 12 other investments so far in 2024. These include stakes in healthcare, fintech, education tech and business software startups, PitchBook data shows.

Of the 15 companies Mubadala Capital has bought into this year, eight are from the United States, six from Europe and one is from the UAE. Eleven were venture capital agreements and four were buyouts or acquisitions, according to PitchBook.

Venture capital deals typically involve buying a stake in startups and small businesses, whereas buyouts or acquisitions are purchases of stakes in more established companies such as Mubadala Capital’s July investment in Bugaboo, a pushchair manufacturer.

Mubadala Capital launched in 2011 with a remit to invest primarily in private equity and public markets in North America and Europe.

In 2017 it became one of the first sovereign wealth funds to manage the money of third-party investors.

As of March this year it had $24 billion of assets under management – $18 billion being from external investors including other sovereign funds, foundations, public pension funds, insurance companies, wealthy individuals and other asset managers, according to its website.

“Mubadala Capital has evolved significantly since inception, with the entry of third-party capital,” López says.

“It is a pioneer within the sovereign wealth fund industry, and I would not be surprised if more sovereign investors globally follow suit with similar strategies.”

The company has launched several funds over the past decade. These include a US ventures fund, which began with $400 million to invest in early-stage companies.

A similar Europe-focused fund closed in 2021 with €450 million ($496 million) of commitments from investors.

Mubadala Capital has made 138 investments across 94 companies. The median size of the funding rounds in which it participated is $70 million and the median value of the companies at the time of these deals is $374 million, according to PitchBook.

Mubadala Capital did not respond to requests for comment.