Arch Venture swings for a $250M fund to bet on biotechs

Stalwart biotech investor Arch Venture Partners is putting together a $250 million 8th fund, according to a regulatory filing, piling on to the roughly $1.5 billion it currently manages.

Arch is creeping up on its 20th year of biotech investing, and the company's portfolio includes well-established successes like Illumina ($ILMN) and Alnylam ($ALNY) alongside promising upstarts like Bind Therapeutics ($BIND) and bluebird bio ($BLUE). So far this year, Arch has lent support to CAR-T innovator Juno Therapeutics and the CNS-focused Sage Therapeutics, and the VC has been a major beneficiary of the prolonged boom in biotech IPOs.

Like many life sciences VCs retooling over the last few years, Arch's latest fund will likely be considerably smaller than its last, a $400 million chest closed in 2007.

Meanwhile, there's some cautious optimism in the biotech venture space after a strong showing in the first quarter. Drug developers raised $1.1 billion on 112 deals last quarter, a 26% jump over the same period last year. That total didn't stack up to a bullish fourth quarter of 2013, but despite persistent ebbs and flows, most biotech VCs believe the sector is on the upswing after a protracted post-2008 slump.

And their fundraising tells a similar story, as Arch joins a growing list of life sciences investors amassing or unveiling new funds over the last 12 months. In February, the U.K.'s Abingworth closed a $375 million raise, while early-stage backer 5AM Ventures revealed a $250 million second close in December, and VC giant OrbiMed launched a $735 million fund the month prior. VC mainstays Frazier Healthcare, NovaQuest, Third Rock and Atlas also unveiled funds in 2013, totaling more than $1 billion.

- read the filing