When Canaan Partners rolled out its last $600 million fund in 2012, the partners expected that it would last a full three years. But in these fast and furious days of venture deals, it wasn't quite enough money for that kind of time horizon. And today Menlo Park, CA-based Canaan is rolling out a new fund, its 10th, with $675 million to invest in new companies--about a third of which will be devoted to biotech and healthcare.
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| Canaan Partners General Partner Wende Hutton |
The bulk of the $225 million or so that will be earmarked for biotech and med tech is being reserved for early-stage companies, says General Partner Wende Hutton, who's counted 6 "exits" in the past 12 months. Canaan has been cashing in on deals like Acorda's ($ACOR) $525 million cash buyout of Civitas Therapeutics, Actavis' ($ACT) $825 million deal for Durata and Dermira's IPO, part of a tidal wave of new offerings from the biotech set over the past two years.
Canaan has a big appetite for companies like Civitas, which has been working on a reformulation of levodopa. That kind of de-risked development approach balances well with their gambles on novel drugs. And Hutton says that plenty of good opportunities are out there when it comes to joining the syndicates being formed to back startups.
"We still see major advances (in medicine) going on right now," says Hutton, who thinks that in many respects the venture crowd is well equipped to back the most promising efforts, without getting wasteful about its money.
"It feels like the right balance," says Hutton, which makes a lot more sense than the go-go days of 2007 when too much money was chasing too few deals. And it's a big improvement over the bad old days of 2010-2011, when funding was drying up and VCs were "too thin on the ground."
Over the past 18 months VCs like Canaan have been making hay while the sun shines on the biotech industry. As a result, this is the latest in a long lineup of new funds to debut, offering billions of dollars in fresh investment cash that will be in play over the next few years. Late last year OrbiMed rolled out a $375 million fund and followed up a few weeks ago with a $325 million fund that will be used for Asian investments. Arch Venture Partners, Venrock, Sofinnova Ventures and Versant Ventures have all raised hundreds of millions of dollars more.
Hutton, one of this year's group of FierceBiotech's "Top women in biotech," expects that she'll be working with a lot of up-and-coming women in the industry for Fund X. A dozen of the VC's portfolio companies are run by female CEOs and 22 were co-founded by women. That's a clear sign to Hutton that the women she's been seeing rising through the ranks in biotech are reaching the top levels of the industry. And more are on their way.
- here's the release
Special Reports: Top women in biotech 2014 - Wende Hutton