Merck KGaA China Seed Fund Invests in Disruptive University of Zurich Spin-off in Neuromorphic Computing

Merck KGaA China Seed Fund Invests in Disruptive University of Zurich Spin-off in Neuromorphic Computing

A pharmaceutical company that existed in the 1600s just invested in a neuromorphic computing startup: a University of Zurich spin-off based in Switzerland and China—one that uses artificial intelligence powering an unprecedented combination of ultra-low power consumption and low latency for a broad range of “edge” applications in smart home, smart security, autonomous driving drones, robots and undoubtedly potentially relevant for a host of healthcare scenarios. Merck KGaA (Merck Group,) with roots in late 1600s in Germany, just used its China Seed Fund to invest in the Swiss and Chinese start up SynSense.

Although not directly applicable to clinical trials today, this type of technology, powering the world of the internet of things to come, will be relevant to healthcare and clinical research in the future. Hence, we’ve provided a brief breakdown of this update via the TrialSite News Investor Watch.

First does Merck really go back that far?

Yes. Friedrich Jacob Merck, an apothecary, owned Engel-Apotheke (“Angel Pharmacy”) in Darmstadt by 1668. This was the ancestor to what today has become a worldwide company.

Is there a connection to Merck in America?

No, this is Merck KGaA or Merck Group (“German Merck”). In World War I, Merck KGaA (Merck Group) was seized by the U.S. government and the new Merck was born.  

What is the China Seed Fund?

Merck KGaA’s China Seed Fund reflects the German company’s recognition that an enormous amount of innovation is now coming out of the world’s second largest economy. Hence, Merck KGaA from Darmstadt initiated a €13 million seed fund targeting startups in China. In parallel, Merck Group launched its innovation hub in Shanghai—the company plans to officially open a second innovation hub in Guangzhou this November 2020. Note that this China Seed Fund is within the scope of the overall €300 million corporate strategic venture arm known as “M Ventures.” The fund was launched in October 2019.

Why was this China Seed Fund created?

It obviously points to a longer-term, strategic relationship fostered between Merck KGaA and the Chinese government.  Within that strategic frame, M Ventures, again the pharma’s venture arm, seeks get intimate with various startup scenes in China to identify and tap into opportunity for investments in disruptive new technologies that could ultimately transform the healthcare sector, for example. More specifically, the initiative targets early innovations generated within the Chinese innovation ecosystem with a connection to Healthcare, Life Science, Performance Materials or new businesses. Seed investments are managed by M Ventures and the China innovation hub of Merck KGaA jointly.

What are the investment amounts?

M Ventures intends to invest in Chinese seed-stage companies with individual investments ranging between €500,000 and  €1 million. The goal of these seed investments is to help the startup make it to the next value inflection point within 18-24 months.

Who is SynSense? (formerly aiCTX)

Formed in 2017, SynSense, the Swiss and Chinese venture, focuses on “neuromorphic computing,” which is generally considered a key enabler of next-generation AI, according to the Merck Group’s news release. A spin-off from the joint Institute of Neuroinformatics at the University of Zurich and ETH Zurich (lab of the co-founder Professor Giacomo Indiveri), the company is leveraging the vast know-how of one of the leading academic research institutions in this space.

What are some key technology differentiators?

From the point of view of Merck KGaA investors, the SynSense neuromorphic chip design is inspired by the human brain, featuring massive parallelism and asynchronous logic in order to overcome what is known as the “von Neuman bottleneck” that apparently slows down AI on conventional computing system. The company harnesses “Spiking Neural Networks” (SNN), which enable ultra-low power dynamic vision processing at less than 1 mW (milliwatt).

Is the Merck KGaA investment part of a bigger A Round?

Yes. The company recently closed a Series A round driving its expanding footprint in China. This investment was led by CTC Capital (China) and included strategic partners such as M Ventures (Merck KGaA’s venture capital arm), Ecovacs (Chinese robotics company) and Yunding (home security China) as well as several financial investors, including CAS-Star and Archer Investment. The amount wasn’t disclosed.

Who provided the financial advisory services to SynSense?

Jade River Capital led by James Tian

What are the use of funds?

The funds will be used for R&D and business development in the quest to commercialize their neuromorphic computing technology.

Where is the company located?

In addition to Zurich, they have teams Shanghai and Chengdu in a bid to capitalize on talent and disruptive innovation.

Who are the founders?

Dr. Ning Qiao (CEO) and professor Giacomo Indiveri.  

Merck KGaA Executive Point of View

Isabel de Paoli, Chief Strategy Officer at Merck KGaA, has seen many trends come and go since she has been with the German pharmaceutical company now nearly 15 years. Ms. De Paoli started her career with the elite consultancy Boston Consulting and thereafter navigated the shark-invested private equity waters for a few years before landing in Merck KGaA. With considerable experience now in a multinational pharma, Ms. De Paoli brings an interesting and diverse background which can greatly contribute to better understanding of how technology and process change can disrupt (for the good) an industry such as drug development. On the investment, she noted, “This is a great first investment by our newly established China Seed Fund and will further strengthen our ties with local entrepreneurs and investors.” She shared, “Our plan to be an active player in the China innovation landscape is paying off with this exciting step, which nicely compliments our activities in our Performance Materials business sector.”