UC Launches $250M Venture Fund To Back Homegrown Startups

Published: Sep 16, 2014

UC Launches $250M Venture Fund to Back Homegrown Startups

September 16, 2014

By Riley McDermid, BioSpace.com Breaking News Staff

The University of California is joining the clamoring pack of venture capitalists looking to get a bigger piece of the Bay Area biotech action, announcing late Monday is will set up a $250 million venture fund to back its own promising in-house research.

The proposal is still subject to approval by the university’s board of regents, who will vote on it Thursday.

The UC system has already seen significant success with smaller, homegrown ventures like bio firms Aragon and Seragon, which were later sold to Genentech for $1.7 billion this summer. It also backed recent IPO star Kite Pharma (KITE), which saw its initial price soar more than 50 percent on its first day of trading, to more than $26. It has now settled in at a respectable $17 at close of trading Monday.

The UC system has 10 campuses, 233,000 students, 190,000 faculty and staff, five medical centers and three affiliated national laboratories, as well as 20 incubators and accelerators.

All of that potential cash flow has not been lost on UC fund administrators, said executives.

"UC Ventures is the result of careful evaluation of best practices to develop the most effective investment vehicle to capture the economic value the University of California is creating through its pioneering research," said UC Chief Investment Officer Jagdeep Singh Bachher in a statement.

"Our goal is to build upon the technology commercialization efforts at UC while carefully managing potential risk exposures,” he said. “We are confident an independent UC Ventures will achieve this."

The school system will join local players like Versant, Alta Partners, Arch Venture Partners and Sofinova in shaping the Bay Area into one of the world’s richest biotech environments. The region is fast gaining on more traditional hubs like Boston as venture capital pours in, including $400 million fund from Arch, $450 million from Venrock, $500 million from Sofinnova and $300 million from Versant.

The size of the fund was a surprise, but the timing was not: It comes close on the heels of a decree issued by UC President Janet Napolitano at the beginning of the summer that all 10 of the university’s campus would be lifting a ban on directly investing in faculty startups in exchange for use of university facilities and services.

"In addition to any financial benefits, we see this fund as a potential vehicle for providing resources to support basic research and talent — among both faculty and students — required to develop innovations that can benefit California and the world," Napolitano said in a press release.

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