UPDATED: Dominant VC NEA gathers $3B megafund, preps for a wave of biotech rounds

NEA's Justin Klein

A wave of venture cash continues to flood into the biotech field. And New Enterprise Associates is now back at the crest of that wave. The venture group put out word this morning that it has raised a whopping $3.1 billion for two new funds, and if history is any guide, a major part of that money will be earmarked for a new blast of global biotech investments ranging from seed to clinical-stage ventures.

A dominant player in the biotech arena, NEA now has $2.8 billion for its oversubscribed 15th fund, with another $350 million NEA 15 Opportunity Fund. The new money--a record venture fund raise, according to Dow Jones VentureSource--arrives as a whole generation of venture groups has been refueling in preparation for another 3- to 4-year round of investing, a trend that is pumping billions of dollars into biopharma startups.

The new opportunity fund is designed to give the partners an added resource to continue to back later-stage companies that want to grow more before trying to pull off an IPO, Justin Klein, a partner on NEA's healthcare team, tells FierceBiotech. The main $2.8 billion vehicle, meanwhile, will continue to fund a broad mix of biotechs, medical device companies and other healthcare ventures.

And no one at NEA is sweating out the current debate over whether biotech in particular is benefiting from a short-term market bubble that may soon pop, he adds. Klein and his colleagues are well aware of the valuations that are being handed out on Wall Street these days, and they say they are big enough to manage whatever comes next.     

"Thanks to our size, our perspective is that we can help companies we back today ride out any cyclical ups and downs," says Klein. The most important aspect to remember while reviewing the roller coaster debate, he adds, is that "new categories of therapies are being developed" and NEA wants to back the most experienced teams and highest quality companies that will develop new drugs "that will be extremely valuable in the long term."

Ex-MedImmune chief David Mott has played a high-profile role as one of NEA's leading biotech investors. More recently he's been joined by Elliott Sigal, the former R&D chief for Bristol-Myers Squibb ($BMY), and biotech entrepreneur Carol Gallagher.

Well known for its tech investments, Mott explained to FierceBiotech a few years ago that the venture group typically devotes 30% to 40% of each new fund to healthcare, with roughly two-thirds to three-quarters of that going into biopharma. Using that formula, Mott and his colleagues would have up to about $900 million to play with for drug development.

And NEA has a broad mandate in biotech. "We're very active across all stages of development, all geographies, all disciplines," Mott told FierceBiotech once.

That kind of money has given NEA the reputation of coming in big, often driving up the overall size of a venture round. Adaptimmune is a good example of that strategy. The immunotherapy company raised $104 million with NEA taking the leading role, and three seats on the board. NEA has also backed such companies as Clovis, Mersana, working on next-gen antibody-drug conjugates, and Ziarco, which is working on ZPL-389, an oral histamine H4 receptor antagonist. 

"It's true that it's never been cheaper to start a business--but it's also never been more important to scale quickly," noted NEA's new general partner, Scott Sandell. "To do this, companies need capital and they need partners who can meaningfully help them."

There's no shortage of either right now. The transatlantic team at Index just banked 650 million more euros to invest. Flagship Ventures rolled out its new early-stage fund with $537 million just days ago, as it was partnering up with Arch Venture to operate a special $150 million venture effort aimed at encouraging the growth of a biotech hub in New York City. Two months ago Lux Capital, which includes biotech in its lineup, raised $350 million. And all these funds follow a long string of new announcements for a venture industry now enjoying a historic bonanza.

NEA is headquartered in Menlo Park, CA, and Washington, DC, with satellite offices in New York, Boston, China and India. 

- here's the release

Special Report: The Top 15 Biotech VC firms - New Enterprise Associates