Arch Venture Partners has operated longer than most venture capital firms by sticking close to its knitting. And now the 28-year-old firm has even more cash to continue funding early-stage biotechnology, materials science and energy startups, capitalizing on a good run of late.
The firm, with offices in Chicago, Seattle, Austin, San Francisco and Europe, just raised a $400 million fund, its eighth to date. The new fund comes in at about $150 million more than Arch expected to raise.
“The enthusiasm behind Fund VIII shows the strength and potential of our approach to finding and funding new platform technology companies that can transform their industries through disruptive innovation,” Arch co-founder and Managing Director Robert Nelsen said.
Arch has made a name for itself in cutting-edge technology sectors, bankrolling startups in areas like biotechnology, nanotechnology and clean tech, even when those companies have fallen out of favor with the general investment public.
But that approach appears to be working well, one of the reasons why the recent fund was oversubscribed.
Asked why Arch has found success in sectors where other firms have struggled, Nelsen said it all comes down to “thinking big, and taking big risks.”
“We are true believers that technology matters and that disruptive technologic innovations can solve most of our problems — and make significant returns,” Nelsen told GeekWire. “We invest in the 90 percent of world GDP that is not the Internet and the cloud, so there are some real problems to solve.”
The firm’s contrarian approach has led to some interesting bets. For example, portfolio companies include Siluria, which is transforming natural gas into oil through a process that Nelsen said “could fundamentally change the world energy mix.”
In Seattle, Arch is one of the primary investors in cancer research startup Juno Therapeutics, one of the most heavily-funded biotechnology companies to emerge in recent years. Juno recently raised $310 million in capital from Arch, Bezos Expeditions and the Alaska Permanent Fund, one of the biggest and boldest venture rounds of the year.
It also holds stakes in Agios, Bluebird, Receptos, Sage Therapeutics and 908 Devices. In the past 24 months, Arch has watched nine of its companies go public, and another six get acquired. Not a shabby record of success.
“It was painful for a long time because we were waiting for some exits, and then we got a slew, with our best fund ever — Fund 7 — so at the end we (had) excess demand,” said Nelsen of the fundraising efforts.
Nelsen, who is based in Seattle, said that he’s bullish on the region’s prospects in biotechnology despite some fits and starts in the industry over the years, the most recent setback being the announced closure of Amgen’s R&D facility along Seattle’s waterfront.
“Seattle has an extremely strong position in immunooncology,” said Nelsen, citing the Fred Hutchinson Cancer Research Center, University of Washington and Institute for Systems Biology. “With Juno and Celgene basing their efforts here, that is big momentum.”
Nelsen also cited the region’s strengths in genomics, global health, and neurodegenerative disease. “We will invest as much as we can, so long as we can find the management to back here,” he said. “Or we can recruit them here.”
