The Silicon Valley biotech investment scene just gained another major player: Andreessen Horowitz. And with $200 million to spend and a plan to place three to four small bets each quarter, the VC shop has the potential to help numerous life science IT startups get up and running.
Andreessen Horowitz, a storied $4 billion Silicon Valley VC firm also known as a16z, expects to make two to three seed investments of a few hundred thousand dollars or more each quarter. On average, the fund plans to commit upward of $3 million to a Series A round every few months, too. The fund has three main focuses: digital therapeutics, cloud biology and computational medicine. In each of these areas, a16z thinks startup economics have more in common with software firms than traditional drug development, a task for which Andreessen Horowitz seemingly has little appetite.
Vijay Pande, the chemistry and computer science expert a16z has poached from Stanford University to oversee the fund, called biotech "slow," "risky" and "expensive" in an interview with Reuters. None of these adjectives fit with the prevailing investment model at Andreessen Horowitz. The first investment made by the new fund is in twoXAR, one of a clutch of startups trying to accelerate drug discovery using data and algorithms. "TwoXAR's approach of using computation to draw insights from independent data sources offers an exciting path forward," Pande said in a statement.
Pande is signed up to the idea that what it takes to set up a biotech has undergone a big change in recent years. "[At traditional biotechs] you often had to put in $100 million and then wait five years before there was any sort of signal for whether it was working or not," he said in a Q&A with other members of the VC shop. Pande sees the rise of digital discovery tools and a new breed of service provider as having lowered barriers to entry. "We can now give computer science grad students or M.D.'s $2-3 million, and they can use cloud bio resources instead of having to build out the lab."
The idea that biotech is transitioning from an industry that necessitates large upfront investments in infrastructure to a model that more closely resembles the software startup field is common in the missives of the new breed of life science players emerging from Silicon Valley. Yet, it is years since the widespread availability of CROs made virtual biotechs a reality. And while the likes of Transcriptic and its robotic laboratory may make it even easier and cheaper for startups to outsource tests, the largest investments of time and money in R&D lie downstream of these steps.
- here's Reuters' piece
- read FierceBiotech's article