Alan Frazier, the founder of Frazier Healthcare Ventures, tells Xconomy's Luke Timmerman that he's preparing to raise a new fund. And while many venture outfits have been moaning and groaning about tough times in an IPO-poor environment, Frazier is taking an upbeat tone, convinced that a strategic shift made more than 6 years ago will enable the VC to be among the survivors in the field.
The change, he tells Timmerman, took place in 2005, when he determined that the venture group needed to build new biotechs that could be easily snapped up by acquisitive Big Pharma companies.
"For a long time, we in the venture business created the wrong companies for [big companies] to buy," Frazier says. "We'd build something with 150 employees and four projects, when what they want are 25 people and one project." The payoff, he says, "has been pretty dramatic. Obviously, it takes a while for that kind of strategy to evolve."
Anyone interested in biotech investing will love Xconomy's run-down of Frazier's hits and misses, complete with the returns--and losses--that Frazier has run up in recent years. At the top end of the hit parade: Marcadia, at 10.67x. At the low end: Alnara, at 3.39x. Calypso Medical Technologies, which ate up $175 million in venture funds before it was sold for spare parts, represents a big miss.
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