Former Obvious Ventures GP Nan Li is referring to it as the “paradigm shift”—a new phase of the biotechnology industry where machine learning is intersecting with the wet lab.
“I just wouldn’t shut up about how excited I was about digital life sciences,” Li says. “All of my investments in the last few years were in this category.”
It’s why he and two former Lux Capital GPs, Adam Goulburn and Zavain Dar, left their respective firms last March and began putting together a new fund. The new firm, which they are calling Dimension, officially closed its first $350 million fund in late December.
Their thesis is to invest in the technologies enabling labs to conduct data mining for large-scale insights—to take an industrial approach to how experiments are conducted and designed.
The future is “where diseases can be predicted sooner and cheaper, and treatments can be widely accessed by the entire population,” Goulburn says. “Technology [will be] the enabler for that over the coming decades.”
Last year was a rather unusual time to raise a fund. Even though discounted share prices could very well translate into one of the best opportunities for outsized VC returns in a decade, rising interest rates and a deflated market, in particular, are putting a lot of pressure on the venture capital sector and IPOs, and scaring away some potential investors.
“As you can imagine—the default answer for most LPs and allocators last year was no,” Dar says of the team’s early days fundraising. Limited partners were flustered over what Dar refers to as the “buzzword bingo terms:” interest rates, inflation, or Russia. Most LPs were spending more time with pre-existing managers or rebalancing their own portfolios than with talking to managers of a brand-new fund. In some cases, LPs were “divesting from alternatives and venture altogether,” he says.
Even so, Dar says there wasn’t a lack of long-term capital, and their fund was oversubscribed. Dar declined to specify any individual limited partners but said they were the usual suspects: Endowments, pensions, foundations, family offices, advisory firms, and entrepreneurs, and he did point out that there was overlap between Lux and Obvious LPs and their own, though he wouldn’t go into further detail.
All three of the investors come from more generalist funds, but they have all worked together in the last decade, whether it be working at the same firms or sometimes even sharing deals in the biotech sector where they now plan to make a name for themselves.
Dar and Li, who had worked together a decade ago at a firm called Innovation Endeavors, both later invested in the Series A of Recursion Pharmaceuticals, a company that uses machine learning to power drug discovery, when it was a small lab with about 10 people in 2016, Goulburn points out. The company went public in early 2021 in a $436 million IPO that valued the company at more than $5 billion on its first trading day, though, in today’s market, shares of Recursion are currently trading at a nearly 74% discount to their IPO price. Goulburn, who has a Ph.D. In stem cell biology and worked with Dar at Lux, was one of the first investors in drug discovery unicorn Eikon Therapeutics.
All three of the GPs have given up their board seats for the investments they made at their previous firms (except for Recursion, where Dar remains an independent director). The Dimension team has already made four investments from the new fund over the last year, including Kaleidoscope Bio, which helps scientists track their experiments, and Lamin, a life sciences data infrastructure company.
How distinct is their strategy really? There’s a slew of funds with specialized teams focused on life sciences tech and biotechnology, and many of those funds are stacked with Ph.D.-types and scientists who understand the product development path and know a thing or two about structuring a clinical trial for success. There are major investors in the game like NEA or Khosla Ventures, as well as more specialized shops like OrbiMed Advisors or SymBiosis Capital Management.
Dar insists that “the capital markets hadn’t yet caught up to what entrepreneurs were doing and developing…There are a lot of economies of scale and cross-pollination of learning when the software company powering life science can work in the same portfolio alongside a next-gen life science company.”
A reminder to weigh in on the private markets…Term Sheet is partnering with Semaphore again for its 15th annual confidence survey of private equity, venture capital, hedge fund, and other professionals. Did 2022 turn out to be a poor year for both investment returns and the managers/service providers of PE, VC, and hedge funds? Are investors complicit in the downfall of Sam Bankman-Fried and FTX? How could a split Congress influence the private markets? Weigh in, if you like, and share your level of confidence in yourself, the economy, and your business; it’s anonymous and should take you 3-4 minutes. You can take the survey here. Have a look at last year’s results here and here.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: [email protected]
Submit a deal for the Term Sheet newsletter here.
Correction, Jan. 26, 2023: The online version of this newsletter has been corrected to reflect that only Zavain Dar still sits on the board at Recursion Pharmaceuticals.
Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
- Angle Health, a San Francisco-based health insurance provider, raised $58 million in Series A funding. Portage led the round and was joined by PruVen Capital, Wing Venture Capital, SixThirty Ventures, Mighty Capital, Wormhole Capital, Mindset Ventures, Crew Capital, Aloft VC, Pilot founder Waseem Daher, and others.
- Crux, a San Francisco-based data integration, transformation, and observability solution, raised an additional $50 million in funding co-led by Two Sigma and Goldman Sachs Asset Management.
- Precision Neuroscience, a New York-based brain implant developer for neurological disorders, raised $41 million in Series B funding. Forepont Capital Partners led the round and was joined by Mubadala Capital, Draper Associates, Alumni Ventures, re.Mind Capital, Steadview Capital, and B Capital Group.
- RapidDeploy, an Austin-based 911 mapping and analytics solutions for public safety, raised $34 million in funding. Edison Partners led the round and was joined by GreatPoint Ventures, Morpheus Ventures, GM Ventures, Ericsson Ventures, Tao Capital Partners, Clearvision Ventures, Tau Ventures, NedBank CIB, and others.
- Miach Orthopaedics, a Westborough, Mass.-based ACL reconstruction treatment company, raised $30 million in Series B funding. Sectoral Asset Management and Endeavour Vision co-led the round and were joined by Amzak Health, Smith+Nephew, DSM Venturing, and the NFL Players Association.
- Strata, a Boulder, Colo.-based identity orchestration company, raised $26 million in Series B funding. Telstra Ventures led the round and was joined by Menlo Ventures, Forgepoint Capital, and Innovating Capital.
- Inscribe, a San Francisco-based fraud detection and document automation platform, raised $25 million in Series B funding. Threshold Ventures led the round and was joined by Crosslink Capital, Foundry, and Uncork Capital.
- Otovo, an Oslo-based residential solar marketplace provider, raised €20 million ($21.82 million) in funding. AxSol, Nysnø Klimainvesteringer, Agder Energi Invest, and OBOS invested in the round.
- Gemba, a London-based virtual reality workforce learning platform, raised $18 million in Series A funding led by Parkway Venture Capital.
- AMPECO, a Sofia, Bulgaria-based EV charging management platform, raised $13 million in Series A funding led by BMW i Ventures.
- Accord, a San Francisco-based collaboration platform for B2B sales, raised $10 million in Series A funding. Matrix Partners, Nat Friedman, and Y Combinator invested in the round.
- Emperia, a London and New York-based virtual spaces developer for the retail industry, raised $10 million in Series A funding. Base10 Partners led the round and was joined by Dastore, Sony Ventures, Background Capital, Stanford Capital Partners, and Concept Ventures.
- Spatial Labs, a Los Angeles-based Web3 hardware/software infrastructure company, raised $10 million in seed funding. Blockchain Capital led the round and was joined by Marcy Venture Partners.
- Supernormal, a Stockholm-based note-taking platform, raised $10 million in seed funding. Balderton Capital led the round and was joined by EQT Ventures, Acequia Capital, and byFounders.
- Oneleaf, a Paris-based self-hypnosis wellness company, raised $5.1 million in pre-seed funding. VC Frst led the round and was joined by Kima Ventures and Raise Ventures.
- The ISH Company, a Rockland, Del.-based plant-based seafood startup, raised $5.1 million in seed funding. ACCELR8 led the round and was joined by Stray Dog Capital and other angels.
- Grilla, a Miami-based skill-based games platform, raised $3 million in funding from Tusk Venture Partners.
- Parable, an Atlanta-based brain care company, raised $2.75 million in seed funding co-led by M13 and Break Trail Ventures.
- Coverdash, a New York-based insurance solutions provider to businesses, raised $2.5 million in seed funding. Bling Capital led the round and was joined by AXIS Digital Ventures, Tokio Marine Future Fund, Expansion VC, and Cameron Ventures.
- Raise Robotics, a San Francisco-based robotic equipment builder, raised $2.2 million in pre-seed funding. Cyberntetix Ventures, Union Labs VC, and Zacua Ventures invested in the round.
PRIVATE EQUITY
- Capsa Healthcare, a Levine Leichtman Capital Partners portfolio company, acquired Tryten Technologies, a Vancouver-based carts provider for the telehealth industry. Financial terms were not disclosed.
- Funds managed by Norwest Venture Partners and Arctos Sports Partners acquired a minority stake in GeoComply Solutions, a Vancouver-based geolocation security provider. Financial terms were not disclosed.
- Walker Sands, a Stone Goff Partners portfolio company, acquired KoMarketing, a Boston-based B2B digital marketing firm. Financial terms were not disclosed.
OTHER
- OpenWeb acquired Jeeng, a New York-based audience management platform, for $100 million.
- Cetera Financial Group agreed to acquire the retail wealth business of Securian Financial Group, a St. Paul, Minn.-based insurance, investment, retirement solutions company. Financial terms were not disclosed.
- CoreWeave acquired Conductor Technologies, a Raleigh-based task management application developer. Financial terms were not disclosed.
- Grocery TV acquired Mediaworks Advertising Solutions, an Excelsior, Minn.-based advertising company offering integrated sanitizer dispenser ad displays. Financial terms were not disclosed.
- Harness acquired Propelo, a Sunnyvale, Calif.-based engineering productivity company. Financial terms were not disclosed.
PEOPLE
- Bain Capital Ventures, a San Francisco-based venture capital firm, hired Slater Stich and Saanya Ojha as partners. Formerly, Stich was with Activation Fund and Ojha was with Coatue.
- J.C. Flowers & Co., a New York-based investment firm, hired Dan Meade as managing director and head of business development and investor relations. Formerly, he was with Castlelake.
- Kian Capital Partners, an Atlanta- and Charlotte-based investment firm, promoted Caldwell Zimmerman to principal.
- Lazard Asset Management, a New York-based asset management firm, hired Jennifer Ryan as managing director and head of North American distribution and promoted Nathan Paul to COO. Formerly, Ryan was with BlackRock.
- Northleaf Capital Partners, a Toronto-based investment firm, hired Stewart Hay as vice chair, global investor solutions. Formerly, he was with abrdn.
Correction, Jan. 26, 2023: The online version of this newsletter has been corrected to reflect that Bain Capital Ventures is based out of San Francisco.
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