Atlas Venture has raised $250 million to invest in existing portfolio companies. The fund, the first of its kind operated by Atlas, will enable the VC shop to support its startups through series B and beyond.
Massachusetts-based Atlas made its name creating, incubating and investing in biotechs out of its space in Kendall Square. The early-stage operation has supported a string of startups, such as Padlock and Unum Therapeutics, to IPOs and trade sales. But the focus of the fund rendered Atlas unable to keep bankrolling its biotechs as their financial requirements ramped up.
Atlas Venture Opportunity Fund I (AVOF I) is the VC shop’s remedy for that problem. Having wrapped up an oversubscribed fundraise, Atlas Venture has $250 million to support its portfolio companies as they get to series B and beyond.
By moving into later-stage investing, Atlas Venture is making use of the resources that have served it well in new company formation. That means the five investing partners responsible for building biotechs—Kevin Bitterman, Bruce Booth, Jean-François Formela, David Grayzel and Jason Rhodes—will also oversee the investment of AVOF I.
The creation of AVOF I follows similar moves by two funds that lead the early-stage space in Europe, namely Medicxi and Sofinnova Partners. Like Atlas, Medicxi and Sofinnova Partners built their reputations on seed and series A investments. Medicxi moved beyond that niche in 2017 when it raised a $300 million growth fund. Sofinnova followed in 2018 with a $340 million crossover fund.
In each case, the funds give the organization a chance to maintain a sizable stake in its portfolio companies as they advance and need more money to support their operations. Without such financial support, biotechs can be forced to accept partnering and buyout deals that offer suboptimal returns for investors.