Life Science Start-Ups Salivate, As NEA Announces Record-Setting $3.1B Funds

Published: Apr 16, 2015

Life Science Start-Ups Salivate, As NEA Announces Record-Setting $3.1B Funds
April 15, 2015
By Riley McDermid, Breaking News Sr. Editor

Life science startups are licking their chops Wednesday, after one of the largest venture capital players, New Enterprise Associates, announced it had raised $3.51 billion for two new “opportunities” funds, with as much as $900 million possibly becoming invested in the booming biotech sector.

Today’s two new NEA vehicles surpass the industry standard setting $3 billion fund that Technology Crossover Ventures created in 2007, which had been the largest ever created, according to industry tracker Dow Jones VentureSource. NEA is based in VC-rich Menlo Park, Calif., and Washington, D.C., with other offices in Boston, New York, India and China.

As for its possible bets on life sciences, the company has made its commitment to healthcare clear. The former head of MedImmune , David Mott, is a major player at NEA, and has told the media in the past that NEA generally invests around 30 to 40 percent of every new fund to healthcare—more specifically biopharma, which gets around 75 percent of those investments.

With the NASDAQ Biotech Index up 66 percent year-over-year, investors have been salivating to get in at the ground floor, and NEA’s new fund could be perfect for that. Certainly its other biotech heavy-hitters, well-known investor Carol Gallagher, and former research head for Bristol-Myers Squibb Elliott Sigal, will think so.

NEA said Wednesday that this is the first time it has also raised a co-investment fund of $350 million that will function as an auxiliary to existing funds.

Peter Barris, NEA’s managing general partner, told The New York Times Wednesday that the massive interest in this new venture is a sign of investor willingness to get involved.

“We got a lot of, I’ll call it unsolicited interest that we couldn’t accommodate,” he said. “The asset class of venture capital is in a good place right now.”

Barris said NEA will continue its existing investment strategy of investing at every stage in the life cycle of start-ups, from the very first seed rounds to even exit or IPO strategies. He said that while there have been warnings about frothiness in the VC space right now, particularly in the white-hot tech and Silicon Valley space, NEA will continue to look at companies with strong fundamentals.

“It appears, and we believe and have great conviction in this, that we have a lot of runway here,” Barris said. “This is not a moment in time. This is something that has legs on it.”

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