Octopus TenX Health: Health-Tech Fund

Second-generation venture capital fund dedicated to health technology

Overview

TenX Health, an emerging VC fund manager spun-out of Ernst & Young’s Healthcare and Ventures division, is raising £100m to invest in the fastest growing opportunities within healthcare technology.

As former founders of the EY Ventures practices, TenX Health combines over 40 years of direct healthcare expertise, proven venture track record and is Europe’s first VC fund dedicated to health tech. The fund’s core focus will be on digital health, diagnostics, data and analytics – subsectors which are widely considered to be uncorrelated to mainstream capital markets.

The TenX Health team is ideally positioned to take advantage of these trends, by leveraging attractive early stage valuations to build a diversified and mutually reinforcing portfolio capable of delivering outsized financial returns and widescale positive impact.

The fund will be investing in Series A and follow on rounds, targeting ticket sizes of £250k-£5m, into European health technology companies. Through this strategy the fund seeks a 30% target IRR.

The fund has confirmed its operational first close following a £10m cornerstone commitment from Octopus Ventures, one of the UK’s leading alternative investment managers. With over £8.0bn AuM and a renowned track record in VC, the cornerstone investor is backing TenX Health to attract the most competitive deals across Digital Health, remote Diagnostics, Genomics and AI.

The fund is targeting a 4Q 2021 final close.

Strategy

The Opportunity
The healthcare industry is evolving at extraordinary pace thanks to advances in modern technology. With the average life expectancy doubling over the past 100 years alone, global healthcare expenditure is projected to grow to $10.6tn by 2022.

Healthcare is also a recession proof, and steadily growing sector for investors. With larger investment rounds occurring across the health technology sector, with average deal sizes increasing by 9.1% in 2018, with significant valuation uplifts between Series A and B, the optimal point of investment in health tech is at Series A.

TenX Health is targeting an underserved market, and is uniquely positioned with in the European VC landscape. Some of the larger specialist VC firms are going after biotech and life science investments, which have been showing unattractive investment curves. Generalist VCs which have some health investments in their portfolios tend to follow predicatable health trends where value has already been priced in.

Target Investments
TenX Health’s strategy is to make investments according to the following strategy:

–  Verticals:  Digital health, diagnostics, data and analytics
–  Ticket Size:  £250k-£5m
–  Stage:  Series A and follow on rounds
–  Target Stake:  10-20% equity stake
–  Geography:  Europe

Impact
Relative to other sectors, investing in healthcare brings direct, measurable and immediate ESG impact.

TenX Health will be a flagship vehicle for the delivery of the UN’s SDG 3 ‘Good Health and Wellbeing’. Through strategic partnership with two state hospitals in India through which TenX will roll out its portfolio into the Indian Health market (which in itself is forecast to reach $372bn by 2020 – 22% CAGR).

Indicative Pipeline

The TenX Health team has identified 9 Series A indicative pipeline opportunities for 1Q 2021. These include:

–  DNA ownership company:  Secure DNA ownership for everyone on the planet  (Stage: Series A)
–  Social care analytics:  Early intervention for troubled and high-risk families  (Stage: Pre-Series A)
–  Digestive tracker:  Pocket-sized digestive health tracker for 10% of the global population with IBS  (Stage: Series A)
–  Secure messaging:  Health-specific WhatsApp for healthcare professionals  (Stage: Series A)
–  Portable incubator:  World’s first inflatable and mobile infant incubator  (Stage: Pre-Series A)

Team

  • Joe Stringer

    Managing Partner, Co-Founder

    >22 years experience in healthcare. Whilst leading EY’s Ventures and Healthcare practice Joe founded and led 3 tech businesses which have gone on to become hugely successful in the NHS.

  • Pooja Sikka

    Partner, Co-Founder

    >15 years experience working with National bodies and NHS providers. A GP by background, Pooja is an Advisor on clinical and digital strategy for StepCare Health Services, India.

Contact

 

Key Facts

Size £100m
Asset Type Venture Capital
Geography Pan-European
Impact Healthcare
Target Return 30% IRR
Fund Structure Closed-Ended
Fund Term 10 years
First Close £10m
First Close Date 1Q 2021
Final Close Date 4Q 2021
Committed Capital £10m