Raising venture capital has been a laggard in recent years, even for companies with strong track records.
This is the experience of Foresite Capital. Despite having 47 IPOs, 28 M&As and 58 FDA-approved drugs, the 13-year-old multi-stage healthcare and life sciences company took two years to raise its sixth capital.
“Almost all of our LPs in fund five were renewed in fund six. They just renewed with 30% less capital,” Jim Tananbaum, CEO and founder of Foresite, told TechCrunch. “We had a hole to plug.”
The San Francisco-based firm was on hand to ensure that its sixth vehicle was not significantly smaller than its fifth fund, which totaled $969 million, consisting of a $775 million seed capital and a $194 million companion opportunity fund dollars. Foresite hired Hadi Tabbaa to bridge the funding gap and lead the company’s extensive investor relations effort. Tabbaa, previously with B Capital and Coatue Management, helped the firm bring in new LPs, including family offices from Asia and the Middle East.
On Wednesday, Foresite announced that it had closed its sixth fund of $900 million.
The firm started investing from fund six nearly two years ago and has backed a number of interesting companies during that time. Foresite Capital made a big splash in April when its accelerator, Foresite Labs, along with ARCH Venture Partners, invested $1 billion to incubate Xaira, a new AI drug discovery startup. Tananbaum also highlighted the company’s recent $135 million Series A round Latigo Bioa clinical-stage biotech company testing an opioid-free pain treatment.
Last summer, Foresite co-led a $115 million round for CG Oncology, a drug discovery company that had successful IPO in January.
Foresite plans to back about 20 companies from its sixth fund, writing checks ranging from a few million to as much as $75 million. “Over a decade ago, we named the company Foresite because we thought we had an idea of where healthcare was headed,” Tananbaum said. “We felt it was going to be a combination of genomics and artificial intelligence that would lead to the ability to deliver care individually.”
These are still big areas of focus for the company.
