Johnson & Johnson incubator gets dedicated VC fund

RM Global has created a VC fund dedicated to the FutuRx biotech incubator Johnson & Johnson set up with OrbiMed and Takeda. The life science investment banking firm has secured preferential access to FutuRx, positioning it to get in on the ground floor alongside the companies that founded the incubator.

To get the fund started, RM Global has pulled in $30 million for its first closing. The plan is to open it up for new investors and dial up its cash haul ahead of a second closing in the near future. That will give RM Global the ability to secure stakes in the likes of BiomX, a FutuRx graduate that raised $24 million from OrbiMed, Johnson & Johnson Innovation, Takeda Ventures and others earlier this month to bankroll its microbiome R&D plans.

RM Global plans to make its first investments in biotechs while they are still in the incubator, after which it will have the option to join later rounds as a preferred investor. The model gives biotechs in the incubator a source of money beyond the seed funding provided through FutuRx, lessening the risk that a lack of capital will constrain the more cash-hungry startups.

“Sometimes they need this money quickly, and in a case like that, even if OrbiMed, Johnson & Johnson and Takeda want to invest these amounts, their investment decision-making process isn't quick enough, and it will be difficult for them to raise additional substantial financing in-house,” Yaron Breski, a partner at RM Global, told Globes.

Breski thinks the presence of an additional source of capital will also allow the incubator to broaden the types of companies it accepts. As it stands, if only one of the founders thinks they will invest in a company after it graduates, FutuRx may opt against accepting them into the incubator. Adding a new, purely financial investor means startups have another chance of securing money.

RM Global has raised money by pitching the fund as a way for investors to get a stake in startups at an early stage and benefit from the due diligence put in place by FutuRx and its renowned founders. This pitch has attracted some strategic investors.

“Some of the investors in the fund are large pharmaceutical companies, but not yet as big as Johnson & Johnson and Takeda. For them, the fund is a way of sitting together with those companies at the same table, learning from them about how they make investments, and strengthening connections with them,” Breski said.

RM Global is better known for advising biotechs on financing rounds and other transactions than for managing money itself. But, with one foot in Israel and the other in the U.S., it has a track record of working with startups around the world and fostering connections. RM Global played a role in the agreement that gave Novartis access to Israel-sourced drug candidates through BioLineRx.