Heads Up Startups: Silicon Valley VC Firm—With an Appetite for Biotech—Nabs Record $800 Million Fund
July 26, 2017
By Alex Keown, BioSpace.com Breaking News Staff
SAN FRANCISCO – Canaan Partners, an early-stage venture capital company, unveiled its new $800 million fund, Canaan XI that could be used to launch a number of transformative biopharma companies.
The venture capital group, which spun out of General Electric Capital 30 years ago, announced the fund on Tuesday in a blog post. The company said it will use the funds to continue its franchise approach to investing in areas where it has “deep expertise,” which includes biopharma. Canaan is a well-known early backer of innovative companies and has supported numerous Series A rounds. Earlier this year, Canaan backed the launch of startup Arrakis Therapeutics, a company that intends to use chemicals to identify new RNA targets and create new small-molecule drugs. Canaan has also supported the likes of immuno-oncology company Ideaya Biosciences, Inc. and autoimmune disease-focused Tizona Therapeutics, Inc.
The Canaan XI is the company’s largest fund to date. In 2014, the company closed on a $675 million fund, Techcrunch noted. The VC group also closed on a $600 million fund in 2012.
“With 30 years under our belts, we’ve consistently seen what works and we’re sticking with it: an early stage, diversified fund across tech and healthcare with focus in core areas,” the Canaan blog post said.
Over the course of the past three years, Canaan said it has had 30 exits, which includes nine biotech companies, John Carroll noted in Endpoints News. Tim Shannon, a general partner with Canaan, told Endpoints that the company likes to take stock of its companies when they enter Phase I trials in order to know if there is a “good chance” of success.
Despite the fact that the Canaan XI fund is the biggest initiated by the VC group, Shannon said the targeting philosophy will remain the same – “Early-stage, transformative, high ownership, high returns.” In the interview, Shannon noted that about $360 million of the Canaan XI fund will be used for the healthcare industry, with about 75 percent of that portion being aimed at the biopharma industry. By the numbers that translates into about $15 million each for about 15 biopharma companies. Of that investment, Shannon told Endpoints that approximately 60 percent of those companies will become “successful exits.”
It’s not just VC funding for Canaan Partners. Last year the company partnered with Yale Entrepreneurial Institute to develop a program aimed at preparing life science faculty and grad students for life outside of academia. The program introduced the academics to “industry experts, investors, biotech entrepreneurs and faculty innovators who can help them navigate career options” in the Business of Biotech program.