Sifted - Riding the Wegovy wave

Good morning there,

Today, Kai Nicol-Schwarz looks into the startups aiming to tap into the huge weight loss drugs market and the bottlenecks that could stand in their way.

Elsewhere:

• 20 robotics startups to watch
• The Bolt alumni who’ve launched their own startups
• Balderton raises $1.3bn across two new funds to back European startups all the way to IPO

— Tom Nugent, newsletter editor

/A message from our sponsor Groupe ADP

Riding the Wegovy wave

The past couple of years have been the best of times for the manufacturers of GLP-1 meds — the new class of weight loss drugs that have taken the world by storm. The valuations of Novo Nordisk and Eli Lilly — two pharma giants that make them — have gone through the roof in recent times. Startups are also looking for a slice of that market, which is projected by some to hit $150bn by the early 2030s. 

“The newer GLP-1 class medications have created real excitement due to their impressive outcomes in weight loss, transforming the treatment options available for those living with obesity,” says Kai Eberhardt, the founder and CEO of Oviva, a Swiss weight loss management platform which began offering GLP-1 drugs as part of its treatment options this year.

The drugs could become the company’s “largest” growth driver in the future, Eberhardt says, and he’s far from the only founder who sees a big opportunity. 

Several startups have expanded the focus of their businesses to tap into the hype. One of them, UK-based digital medication and supplements provider Numan, styled itself as a “men’s health” brand for years after launching in 2016. Recently, its website has expanded its marketing reach to target women, too, after it started selling weight loss drugs to a broader market.

Despite the market potential, three things could stand in the way of growth in Europe.

One is the availability of VC dollars to scale. The bigger raises in the sector have been in the US, but only one weight management company, Calibrate, has raised a round of $100m or more, according to Dealroom. In Europe, no company selling the drug or treatment pathways around it has raised more than €10m in a single round.

Investors tell me that while many of them are looking into the space, they’re also waiting for supply chain issues to be ironed out. Manufacturers have struggled to keep up with demand at times; last year, startups in the UK were told by the government to remove Ozempic from sale due to shortages of the drug for diabetics, for whom the drugs were first intended to treat. 

There’s also the small matter of finding the right customers to make a scalable business feasible. It’s hard to hit huge revenue figures in Europe as a direct-to-consumer healthtech, as the majority of people have their healthcare paid for by the state — so are not used to paying out of pocket.

While Oviva has been reimbursed by the NHS since 2016 for its weight loss management platform — which provides GLP-1 meds alongside clinical weight loss care — its relationship with the organisation has been in place a long time before this new class of weight loss drugs were popularised.

For startups looking to crack contracts with healthcare systems for the first time, it can be tougher. 

“It is still a struggle with reimbursement, in every country,” says Hekla Arnardottir, partner at Crowberry Capital, a backer of Danish startup Embla, which prescribes GLP-1 meds alongside ongoing clinical care for patients looking to lose weight.

She points to difficult regulations and healthcare systems not always wanting to work with startups. Without reimbursement in Europe, she adds, it’ll be hard for healthtechs to reach the sort of revenue figures needed to raise growth capital and hit unicorn status.

While it’s early days in the sector and there are still big hurdles for startups to navigate, one thing is clear: the weight loss market is a lot more than a fad. “I've never been an investor in a company that’s got so much attention — in a space that’s got so much attention,” says Arnardottir. 

Read the full piece here.

Readers, I also want to hear from you. Is there a market here for startups in Europe to drive serious revenues from GLP-1 meds? Do you think we’ll see a European company raising a megaround or even hitting the magic $1bn valuation in the sector in the next few years? And is there enough evidence to point to this being a VC-backable model with strong returns down the line?

— Kai Nicol-Schwarz, reporter

🇬🇧 UK-based VC Balderton has raised a total of $1.3bn across two new funds — one $615m early-stage fund and a $685m growth fund — to back startups in Europe through to IPO. It is the largest ever combined early-stage and growth fundraise dedicated to European startups.

😯 British Business Bank has filed winding up petitions for 27 startups issued taxpayer-funded loans under the pandemic-era Future Fund, the FT reports. The scheme, which was a flagship policy of Rishi Sunak (who was chancellor at the time) and was run by British Business Bank, helped 1,190 companies with convertible loans worth £1.14bn between May 2020 and July 2021. Under the terms of the funding, startups had to repay the loan if they didn’t raise a funding round that included a company valuation within three years. 

🤖 20 robotics startups to watch.

🚕 The Bolt alumni who’ve launched their own startups.

🤝 How to give your employees equity, no matter where they live. (Sponsored by Remote)

The ultimate deal sourcing tool

Are you struggling to find promising early-stage startups? Try Sifted Pro — the ​​ultimate tool kit for VCs and investment firms. Enhance deal sourcing with access to verified early-stage startup data. Book a demo so you can explore the platform and see if it's right for you.

Future of Flying. With environmental pressure mounting, this report takes a journey through the tech that is changing airports — and air travel — across the globe. Download it here.

Greeking Out 2.0. Is Greece fast becoming a go-to destination for tech? Our report explores the success stories of the Greek startup ecosystem, highlighting what the Mediterranean hub might look like in the future. Download it here. 

Going global through M&A. 90% of executives expect an increase in foreign M&A targets in 2024. If you’re looking to go global, our Sifted Guide will help you better understand how to navigate the complexities of moving to a new market. Download it here.

B2B SaaS Rising 100. Meet the ultimate list of B2B SaaS startups we believe will someday join the ranks of the $1bn-plus unicorns and explore the market forces shaping and shaking them. Download it here. 

London-based Gaussion, which uses an external magnetic field to improve EV battery performance and shorten charging times, raised €12m in Series A funding. Autotech Ventures led the round and was joined by investors including BGF and UCL Technology Fund.

If you’d like to submit a deal, get in touch. 

For more deals, analysis and M&A insight, become a Pro subscriber to receive our weekly Deals newsletter.