San Francisco-based investment firm venBio plans to back about a dozen new biotech startups over the coming three years with its latest fund, disclosed Thursday morning.
Aaron RoystonThe firm attracted $528 million for its fifth fund after initially targeting $500 million, Aaron Royston, one of three managing partners for the fund, told Endpoints News.
It’s similar in size to the $550 million it secured for its predecessor fund three summers ago. The “last few investments” are still being made from that go-around, he said.
“The reason that we’re focused on that small portfolio size is it allows us to be extremely selective with our investing, but also lead each of these financings,” Royston said.
The 13-year-old firm’s latest raise came together quickly. VenBio said it initiated the fundraising in the middle of April. Since then, multiple other biotech and life sciences investors have reeled in their own sophomore or veteran funds, including Flagship Pioneering, Foresite Capital and Amplitude Ventures, among others.
VenBio’s portfolio has hit some key milestones lately. Two of its companies, autoimmune drugmakers Alumis and Artiva, went public this summer, and Bristol Myers Squibb bought its radiopharmaceutical company RayzeBio just months after landing on the Nasdaq.
The former CEO of Rayze, Ken Song, could be one of the beneficiaries of venBio’s newly minted fund. Song recently became CEO and chair of Candid Therapeutics, according to his LinkedIn profile, and the new company is working on biologics in the autoimmune space, according to a job posting. Royston said Song is an “operator that we’d be very enthusiastic to back going forward.”
‘Return an abundance’
Companies in the radiopharmaceuticals and inflammatory and immunology space have caught venBio’s interest in recent years, but the venture capital firm doesn’t box itself into specific disease areas, Royston said. Renal diseases and cardiometabolic diseases are also intriguing areas for the firm, he added.
VenBio can back startups in a variety of areas as long as they get to “very meaningful and validating clinical data,” the managing partner said.
“Because we’re focused on funding companies to clinical data, which often creates optionality, we’ve been fortunate to be able to return an abundance of capital,” Royston said. “For our first three funds, all capital that’s been called has been returned and then obviously plus a good amount.
“That ability to return capital and not just have marked-up book value has benefited us tremendously,” he continued. Limited partners are looking for investors to turn science “into actual products and medicine” so the biotechs have optionality, he added.
Companies backed by venBio have secured nine drug approvals in the past six years, Royston said.
Yvonne Yamanaka“The book value of a portfolio is less important these days than the concrete value that can be realized,” he said. “Companies that are public, where you can look at the fair current value of that company or distributed capital via M&A, are really in focus. Marked-up private value is a bit less so because it’s such a lagging indicator.”
The company also promoted principal Yvonne Yamanaka to partner.
“Almost all” of the firm’s limited partners came back for the fifth fund, Royston said. The firm is backed by undisclosed sovereign wealth funds, corporate pensions, endowments, medical institutions, family offices and other groups.
