H.I.G.'s biotech team has rounded up $268 million for its first dedicated life sciences fund. In the coming years the team plans to invest between $3 million and $20 million, typically, in each of a range of 12 to 15 developers in North America, says Managing Director Aaron Davidson.
There's no particular disease focus at H.I.G., Davidson tells FierceBiotech. H.I.G.--which has invested in biotechs like Alder and Tranzyme--doesn't prefer a pipeline or platform company. And there's no particular geographic focus within the continent, either. What they're going to be looking for are companies with "great products," which can offer a payout either through an acquisition or an IPO in a four- to 6-year time frame.
"What we worry about is the product," says Davidson. "And our intention is to finance product-focused companies." The key question they have: "Will a reasonable amount of private capital be required to get to the point where a transaction or public offering is highly likely?" It also helps when the company's executive team has a nucleus of one or two experienced developers in the mix.
IPOs, of course, haven't been in favor with investors for a few years now, and Davidson doesn't believe that will change anytime soon. But a public company with good products can raise money from public offerings, he adds. And for now, it's full steam ahead on the financing front. Davidson says the H.I.G. team closed its first venture deal with the new money on Monday and another is close to completion.
"From our own perspective we are finding lots of great opportunities with no difficulty in syndicating those opportunities," says Davidson. "Sometimes shakeouts are healthy and it appears there has been a shakeout. There are still (venture) groups that will struggle, groups without good track records, and they won't raise funds. That will happen forever."
- here's the release