Versant Ventures banked $950 million in its latest raise to invest in 20 or more biotech startups and chip into later-stage rounds for its portfolio companies.
The capital will be split into three funds, including $560 million to form a primary fund, known as Fund VIII, and $140 million for Voyageurs II, a “booster” fund to supplement Versant’s investment in early-stage startups. The firm will use the remaining $250 million to invest in series B or later rounds through its Vantage II fund.
Versant will invest Fund VIII in biotech startups in the U.S., Canada and Europe. It expects to create the majority of these companies from scratch using its discovery engines that are dotted around those regions.
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“The new fund probably will continue to focus on those categories where we’ve had previous success, such as gene therapy, gene editing, cell therapy and precision oncology,” said Brad Bolzon, Ph.D., chairman and managing director at Versant Ventures, who expects to build around two-thirds to three-quarters of the companies from scratch.
“Most of the time, we build our own companies but occasionally, we come across an opportunity in a space or focus that we find to be an extraordinary opportunity and we will join a syndicate in a series A," Bolzon said.
A recent example of that kind of extraordinary opportunity would be Pandion Therapeutics, the IL-2 player that Merck splashed out $1.9 billion to buy.
As it looks to deploy Fund VIII, Versant will continue to look for platform companies with technology that could lead to multiple different product ideas, rather than companies focused on one or two assets, said Tom Woiwode, Ph.D., managing director at Versant.
“We try to avoid binary risk, so we’d rather have a company with a solid platform technology base that, even if one program falters, it’s an engine for an entire portfolio,” Bolzon added.
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The Voyageurs II fund will serve as an additional pool of capital for certain startups that may need more than the typical amount of capital early on. The firm figures between five and seven of its 20 startups will need that extra boost, so that $140 million shakes out to about $20 million per company, Woiwode said.
“Some of the categories we are in are fairly capital-intensive and we would rather have access to additional capital for those high flyers than have management stop what they’re doing and go out to raise a financing round—it's very distracting for an early-stage company,” Bolzon said.
This latest raise comes two years after Versant’s last fundraising. In December 2018, the firm picked up $700 million, $600 million of which went into a global biotech fund, Fund VII, and $100 million went into Voyageurs I, a companion fund to back five to eight Canadian startups.