Foresite Labs' new $173M fund to bankroll fewer startups but 'big ideas' fueled by data

Foresite Capital has raised a $173 million fund to bankroll biotechs and healthcare services startups formed in the VC shop's incubator, Foresite Labs. 

The life sciences investment firm decided to raise a fund dedicated to the startups it incubates because Foresite's limited partners wanted more exposure to those companies, said Vik Bajaj, Ph.D., managing director and leader of Foresite Labs, in an interview with Fierce. The existing and prospective LPs expressed that interest when Foresite was raising its $969 million fund V, which was disclosed in February 2021. 

Another driver for what Bajaj called the "modest fund" is that startups in Foresite Labs were "growing up faster than we anticipated, so there was additional need for capital." Bajaj joined Foresite in 2017 and helped launch its Labs division in 2018. He was previously chief scientific officer of Grail, the cancer blood test maker that Illumina consumed for $8 billion in 2021. 

Foresite Labs doesn't have a target goal for the number of biotechs and other startups it will build, but the focus will be on three areas: precision medicine, platform companies and healthcare services. For examples, we can look to Foresite's existing  portfolio companies. Autoimmune disease company Alumis (formerly Esker Therapeutics) and TenSixteen Bio fall under the first bracket whereas protein-focused Interline Therapeutics and synthetic-biology-focused Sestina Bio fit into the second bucket. 

RELATED: Foresite banks $969M to back companies tackling healthcare challenges highlighted by pandemic

“In spite of the progress in synthetic biology in some areas, it hasn’t lived up to the promise that was expected of it over the last two decades and one major reason is that even the most sophisticated and larger scale experiments, they only explore maybe 0.1% of the genetic variation that gives rise to a property or phenotype that you desire in a cell," Bajaj said in reference to Sestina. 

The incubator, one of many in a field of biotech builders like Flagship Pioneering and Leaps by Bayer, has a tilt toward data science, Bajaj said. The VC shop sees the undertaking of assembling data sets as a barrier to entry for entrepreneurs. 

"These companies have to be able to produce their own data sets, whether they're discovery data sets in the drug discovery end of the spectrum, or they are data sets through which outcomes are rigorously measured as an example on the clinical end, and that's remained a challenge," he said. 

After two years filled with a "flurry of activity," Foresite Labs is ready to focus on fewer but "big ideas that have real potential to be transformative," Bajaj said.