SV Life Sciences raised the year’s second-largest life sciences fund thus far, exceeding its targeted amount to close with $523 million in commitments.
The firm originally planned to raise $400 million, but attributed its fundraising success in today’s “challenging environment” to its past success, according to a statement.
Despite the apparent exuberance for investments in life sciences, SV partner Paul LaViolette said, "We haven’t hit the bottom yet" in a presentation to a room full of VC’s at the IN3 Investor’s conference on June 10 in Boston. "There’s a whole pipeline of companies that still have to fail before we have market equilibrium." There remains a large bottleneck of investments venture firms made in med-tech startups during the boom years, anticipating exits through IPOs and mergers in relatively short time frames.
The new fund is expected to invest in companies involved in a number of healthcare sectors, such as biotechnology and pharmaceuticals, medical devices, health services and health information technology. Investments will generally range from $5 million to $35 million, according to the statement.
The firm also sees opportunity in funding companies whose existing investors are struggling financially, Chairman James Garvey told the Journal. “It lets us be on the right side of the Darwinian equation,” he said. “We think that the weaker firms will get flushed out.”
SV’s impressive fund-raise suggests it will be one of the survivors as those less-capitalized firms die off in an anticipated industry shake-up that many observers expect will happen in coming years. Ten-year venture capital returns have fallen in recent years, as the once-lucrative IPO market has slowed and technology startups no longer need as much capital as they once did to get rolling. That’s led to much hand-wringing in recent years about the venture model being ‘broken.’
Approximately 60 percent of SV’s capital commitments came from the United States and 40 percent from Europe and the rest of the world. The latest fund-raise brings the firm’s capital under management to about $2 billion. In addition to Boston, SV has offices in San Francisco and London.