Arch brings in another $3B for biotech startup investing

Dive Brief:

• Venture capital firm Arch Venture Partners has closed its largest-ever fund, raising $3 billion to create and support early-stage biotechnology companies.
• Arch’s fund, its 12th, follows record hauls from other biotech investors like Third Rock Ventures and Atlas Venture. This fresh funding has come in the midst of a historic downturn in the biotech stock market that’s led dozens of companies to restructure and made it more difficult for young drugmakers to go public.
• “All the fundamental innovations in biotechnology are accelerating, with huge promise for new preventive, disease-modifying, and even curative treatments,” said Robert Nelsen, Arch’s co-founder and one of its managing directors, in a statement. “Science doesn’t care what markets are doing, and science moves forward.”

Dive Insight:

Founded in 1986, Arch has grown to be one of the most prolific venture firms in technology and the life sciences. It has backed more than 150 companies — some of which, like Alnylam Pharmaceuticals, Bluebird bio and Sage Therapeutics, now have drugs either on the market or nearing regulatory approval. Others, like Juno Therapeutics and Receptos, were bought in multibillion-dollar acquisitions.

Near the start of the coronavirus pandemic, in April 2020, Arch closed two funds that together raised $1.5 billion for early-stage biotech companies. Less than a year later, the firm capped off its 11th fund, raising another $1.9 billion.

Now, Arch has another $3 billion to direct at drug startups.

Despite recent challenges in the biotech market, Arch’s latest fund had contributions from existing limited partners as well as “some significant new pension and sovereign wealth funds and family offices,” according to a spokesperson for the firm. That’s similar to Third Rock, which earlier this month closed a billion-dollar fund in which all of the firm’s existing limited partners and some new ones participated.

As for where the money will be directed, Nelsen said in an emailed statement that Arch has “no desire to move later or more mature. Our core is early science.”

“We do, however, see opportunities to consolidate multiple early stage technologies under great management teams,” he added. “In this market, to some extent, the opportunity set for us has expanded, not contracted.”

Like Flagship Pioneering, the biotech incubator that founded Moderna, Arch has shown an interest in companies with technologies that have the potential to create multiple products. Alnylam, for example, has brought four RNA-based medicines to market through a drugmaking platform that uses lipid nanoparticles and conjugates.

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