Longtime VC player Canaan Partners has announced its newest fund and expects to funnel a good portion of that money into biotech over the next few years.
The technology and life sciences firm said it’s brought in a fresh $800 million to fund early-stage investing. This is Canaan’s 12th such fund and ties the amount it brought in back in June 2017, which it said at the time was a company record.
Canaan plans to divvy up 60% of the fund into technology and 40% into life sciences, with roughly 80% of that portion going into biotech, general partner Julie Grant told Endpoints News. That’s about $256 million in new capital headed the industry’s way.
“As early-stage venture investors we’re less stock tickers looking at a list of companies and trying to prioritize, as we are builders,” general partner Nina Kjellson added. “We try to put in a committed structure and realistic timelines.”
Tuesday’s news was published on the firm’s blog, which noted that Canaan has made 40 seed and Series A investments over the last two years. Some of their most prominent successes include Arvinas, which went public last year after being incubated at Canaan in 2013, as well as Tizona, which Gilead bought out for $1.55 billion in July following Canaan’s participation in their Series B.
The strategy for the new fund will remain largely the same as Canaan’s previous ventures, Kjellson said, focusing on companies either going into their first human trials or developing new drug discovery platforms. Canaan expects its primary therapeutic areas to be oncology, immunology and ophthalmology.
Of course, Canaan is looking for places where it can make some money, too.
“We’re looking for opportunities to drive to liquidity within one to three rounds of venture capital,” Kjellson said. “Good examples of that would be Ideaya, Arvinas, NextCure and Tizona, all of whom have reached exit by IPO or MMA.”
When it comes down to deciding between a handful of companies in which to invest, Grant said Canaan looks for the place that has the best people to break the tie. The firm conducts its research to identify its targets and then speaks to as many individuals as they can, which in the biotech world involves anyone from those inventing the new technologies and molecules to the clinicians and doctors running the trials.
“VC and biotech is a team sport — it’s matching operators with scientists and then bringing in capital that understands the path to creating more capital and lasting biotech,” Grant said.
It’s too early to say what Canaan’s looking at so far with its new fund, though Kjellson did say the firm is in discussions with some spinouts and companies starting up out of academic settings. Historically, Canaan’s funds have lasted roughly three to three-and-a-half years and this new cash could provide similar runway.
And with the Covid-19 pandemic turning everyone’s attention to the life sciences field, there’s no shortage of potential.
“We haven’t really missed a beat during the pandemic. We’ve been able to adapt our model really well to working from home and meeting entrepreneurs over Zoom or socially distanced,” Kjellson said. “The market is very verdant but we’re keeping our discipline because valuations are quite high.”