New Enterprise Associates packs financial firepower like few other venture capital outfits today, particularly those investing in biotech. Fresh off closing a diversified venture fund of $2.6 billion revealed in July, NEA is expected to spend roughly a third of its capital from the fund on healthcare investments primarily in the biopharma industry, General Partner David Mott (who sold MedImmune to AstraZeneca ($AZN) for $15.6 billion in 2007), told FierceBiotech.
Venture firms have traditionally served a key role in backing big ideas in bioscience out of academia or elsewhere, but lean times in the VC industry over the past several years have left capital-intensive biotech businesses starving for dollars. Amid austerity for lots of biotech VC players, NEA seems to have survived the collapse unscathed–it’s latest fund of $2.6 billion is one of the largest hauls in history and follows its $2.5 billion fund closed in 2009.
Historically, NEA has pumped 30% to 40% of its total funds into healthcare companies, Mott says, with about two-thirds to three-quarters of the healthcare pot dedicated to biopharma. (Mott says that the firm has no fixed numbers for investing in any of its asset classes, but he expects the latest fund’s allocations to be consistent with past percentages.) When you do the math, those historic numbers applied to this latest $2.6 billion fund mean NEA could funnel as much as $780 million into biotech/therapeutic bets.
No new healthcare VC funds this year can match those totals, and only a handful of firms such as OrbiMed Advisors, Burrill & Company, Sofinnova Ventures and Third Rock Ventures–all of which have closed healthcare-focused funds between $400 million and $600 million over the past two years–come close. Mott and his partners are on the winning end of a consolidation of money flowing to fewer VC firms, empowering them to pick and choose juicy deals and terms to suit their profit goals.
“I think it’s a fabulous time to be investing in biotech because we’re in the enviable position of having so much capital and staying power as an organization,” says Mott, whose firm has offices in the U.S., India and China. “I think that’s a huge competitive advantage in biopharma investing.”
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