Merck KGaA wants to get in early on Chinese innovation, sets up seed fund

Merck KGaA is carving out a small — but emblematic — portion of its venture arm to nurture new Chinese startups while it cuts the ribbon on an innovation hub in Shanghai.
The €13 million (RMB100 million) seed fund falls within the scope of M Ventures’ €300 million mandate, according to the German drugmaker, and would be jointly managed by that team and the innovation hub. Startups that fall into the healthcare, life science, performance materials and “new businesses” buckets can expect to receive investments between €500,000 and €1 million designed to bring them over to a value inflection point within two years.
“This is the first activity of our corporate strategic venture arm in China,” CEO Stefan Oschmann said in a statement. “Our seed fund initiative aims to deliver strategic returns so as to underscore our position as an innovator in China and to strengthen our ties to the dynamic Chinese innovation ecosystem.”
His comments highlight how China has become a CEO-level priority among multinational pharma giants. While the country has long been appreciated for its massive market and manufacturing scale, as McKinsey & Company Partner Franck Le Deu noted in a recent analysis, “China is an emerging source of product, portfolio, and business model innovation.”
At the newly opened innovation hub in Shanghai’s New Bund World Trade Center — and Merck KGaA is planning two others in Guangzhou and Beijing — the company will collaborate with startups, academic institutions and other industry players on various projects. There’s an accelerator component, which has already enrolled its first batch of six fledglings from China and neighboring countries.

Merck KGaA wants to get in early on Chinese innovation — so it’s setting up a seed fund there