Friday, September 14, 2007

Third Rock Caps First Fund at $378 Million

Third Rock Ventures, the newest life sciences venture firm in town, has finally put out the press release announcing its new fund: $378 million.

The IN VIVO blog talks to partner Kevin Starr about the firm's focus. From that post:

    The six general partners—including former Millennium CEO Mark Levin—expect to hold key management positions at these start-ups during the first year or so. They’ll negotiate the deals, set up the shop, do the hiring, etc., etc. to assure these companies get off to the right start. “We’ll be the start-up team,” says Kevin Starr, the former chief operating officer and chief financial officer at Millennium. The partners will serve CEOs, heads of science, whatever is necessary “to make sure these companies are built the right way, have the right cultures, hire the right people, and do the right partnerships. We are going to get involved in a hands-on way.”

And Forbes also has a piece, which is pretty critical of Millennium as an investment and as a company. Matthew Herper also talks about Third Rock's strategy:

    Part of the new venture fund's approach will be to closely manage start-ups. Other VCs are backing dozens of companies a year, but Third Rock will only look at a few biotechs, each getting a few tens of millions of dollars. At that rate, it will take the fund several years to invest all the money that it has.

    Another strategy: Third Rock won't raise $50 million or $100 million worth of venture capital for a single biotech before bringing the company to the public markets, private equity or selling out to a larger drug maker. These deals are just too dilutive. Better to follow the Millennium example and start generating revenue through partnerships early.

Last month, I noted in the Globe:

    Greylock Partners of Waltham offered an assist in getting Third Rock into orbit, investing some of its own money and introducing Levin to several investors; Greylock's Bill Helman was one of the original investors in Millennium. Levin himself was a VC with Mayfield Fund in California before starting Millennium.

    "Life sciences is an area of pretty mediocre returns for venture capital," says Helman. "They have a strategy for breaking out of that." Levin didn't respond to calls seeking comment.

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