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Life Science Venture Funds Raise $2.56B for Start-Ups

Investment graphic

(Gerd Altmann, Pixabay)

2 April 2020. Two investment companies specializing in health care and life sciences revealed new venture funds to finance young enterprises with innovative technologies. ARCH Venture Partners in Chicago and Flagship Pioneering in Cambridge, Massachusetts raised nearly $2.6 billion for venture investments, to be released through three separate funds.

ARCH Venture Partners invests in early-stage companies based on research in the life and physical sciences, commercializing findings from academic labs, national labs, and corporate partners. Many of its investments go to companies it founds, such as Boundless Bio, a company in San Diego developing treatments for aggressive solid tumor cancers that block the effects of DNA residing outside of chromosomes. As described by Science & Enterprise in September 2019, Boundless Bio is a spin-off company from Ludwig Institute, affiliated with University of California in San Diego, which raised $46.4 million in its first venture funding round, led by ARCH Venture Partners.

ARCH is starting two new funds totaling $1.46 billion mainly for companies commercializing life science research. Its Fund X and Fund X Overage, says ARCH, plan to support companies developing health care technologies, with Fund X Overage expected to take part in fewer deals, but with higher dollar amounts.

“Our companies bring cutting-edge science, tools, and talent to bear in developing medicines for a wide range of diseases and conditions faced by millions,” says ARCH managing director Kristina Burow in a company statement. “We invest at all levels, whether it’s fifty thousand dollars or hundreds of millions, so that each company and each technology has the best chance to advance and change the landscape.”

Flagship Pioneering is an incubator of new science-based enterprises, as well as a venture financier. The company’s process takes promising ideas from the lab, and creates prototype companies, then new companies built around those ideas. Once the new companies reach growth stage, they’re spun out to attract outside investors. Flagship says it creates six to eight new companies each year, and 20 of its growth-stage companies since 2013 are now publicly traded enterprises.

A recent example of a Flagship-incubated company is Omega Therapeutics Inc. in Cambridge, Massachusetts. As reported by Science & Enterprise in September 2019, Omega Therapeutics is a biotechnology enterprise developing various disease treatments that address regions in the genome precisely regulating expression of proteins.

Flagship raised $1.1 billion for its seventh Origination Fund that expects to support new human health and sustainability companies through its Flagship Labs incubator. With this fund, Flagship plans to finance new health care products from existing portfolio companies with a unit called Flagship Medicines. In addition, Flagship anticipates backing innovative ideas that focus on machine learning and other artificial intelligence technologies.

Moreover, says founder and CEO Noubar Afeyan in a Flagship Pioneering statement, the company is beginning a new initiative in health security, “designed to create a range of products and therapies to improve societal health defenses by treating pre-disease states before they escalate.” Afeyan adds, “The current Covid-19 crisis deeply underscores the essential need for a comprehensive health security initiative to complement our current health care system.”

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