Four years after Andreessen Horowitz raised its first bio fund, the VC shop is launching its third biotech- and healthcare-focused fund. At $750 million, Bio Fund III is a16z’s biggest fund of its kind yet, and it will bankroll early-stage companies, though General Partner Jorge Conde said it will “selectively” participate in more mature companies, too.
“We launched our first bio fund about four and a half years ago in recognition of an oncoming trend of biology intersecting with advanced computation in a meaningful way,” Conde told FierceBiotech. “Machine learning and artificial intelligence would have an outsize impact on how we discover drugs and diagnose disease.”
“And if you look four and a half years hence, to where we are, we think that thesis in very large part has been borne out,” he added. “With Bio Fund III, we recognize that trend has continued: biology, computation and engineering continue to intersect … The technology industry and the healthcare industry continue to merge, blur lines and break down siloes that previously existed.”
Bio Fund III dwarfs its two predecessors, which totaled $650 million together. And that’s not all—a16z has built a team around its biotech and healthcare efforts. When it launched the $200 million Bio Fund I, it had one general partner dedicated to those efforts in the form of Vijay Pande, Ph.D. Now, it has four.
It needs that money and manpower to build a “new breed” of companies that will “attack the most audacious goals in healthcare: using AI to discover new drugs; using data to provide a real-world view into how patients move through our healthcare system; programming our cells to fight disease; improving how we care for our sickest patients; re-engineering the entire process for how we develop, test, and get drugs to patients quickly and at lower cost,” a16z wrote in a blog post Tuesday morning.
“We wanted to build a bench here not only to cover the broad waterfront, what we see as the opportunity set at these intersections, but also to go very, very deep in evaluating and supporting entrepreneurs building these companies,” Conde said.
That bench includes Julie Yoo, former vice president of product at Generation Health, and Vineeta Agarwala, M.D., Ph.D., an oncologist who’s also an alum of the Broad Institute, Flatiron Health and GV (formerly Google Ventures).
The “sweet spot” for Bio Fund III will be seed and series A rounds for early-stage companies, but a16z may occasionally back a series B or even a series C round, Conde explained. As for why this new fund is so much bigger than its predecessors, Conde said the VC firm needed a fund to match the broad opportunity before it—one that includes synthetic biology that doesn’t just play a role in healthcare and human health but also in agriculture, textiles manufacturing and the like.
A16z expects the “new generation” of companies it backs to become the flagship companies of their space, where biology and technology meet.
“Over the last decade or so, a new generation of companies emerged where there was an important technological shift—internet, mobile, pick your technology shift,” Conde said. “Those companies grew to be larger and more important companies than people previously anticipated.”