Venture Fundraising: A Slog for Even the Most Experienced Firms
Headwinds in Venture Capital
Over the last few years, venture fundraising has been a challenging and time-consuming process for many firms, even those with an impressive track record. One such firm is Foresite Capital, a 13-year-old multi-stage healthcare and life sciences company that has boasted an impressive portfolio of 47 IPOs, 28 M&As, and 58 FDA-approved drugs.
Despite its strong reputation, Foresite Capital took two years to raise its sixth fund. According to CEO and founder Jim Tananbaum, the firm faced a significant challenge in ensuring that its sixth vehicle was not significantly smaller than its fifth fund, which totaled $969 million. The fifth fund consisted of a $775 million core fund and a $194 million companion opportunities fund.
A Bridge to Success
To bridge the funding gap, Foresite Capital hired Hadi Tabbaa, a seasoned investment professional with experience at B Capital and Coatue Management. Tabbaa was tasked with leading the firm’s widespread investment relations effort and bringing in new Limited Partners (LPs). His efforts paid off as the firm successfully attracted new LPs from Asia and the Middle East.
Success in Fundraising
After two years of hard work, Foresite Capital finally closed its sixth fund with a total of $900 million. The firm began investing from this fund nearly two years ago and has already made several notable investments. One such example is Foresite Labs, the firm’s accelerator that partnered with ARCH Venture Partners to invest $1 billion in Xaira, a new AI drug discovery startup.
Recent Investments
Tananbaum highlighted the firm’s recent participation in the $135 million Series A of Latigo Bio, a clinical-stage biotech company testing a non-opioid pain treatment. Additionally, Foresite co-led a $115 million Series F into CG Oncology, a drug discovery company that successfully listed on the stock market in January.
Focus Areas
Foresite Capital plans to back approximately 20 companies from its sixth fund, with investment sizes ranging from a couple of million dollars up to $75 million. According to Tananbaum, the firm’s focus areas remain genomics and artificial intelligence, which it believes will continue to play a crucial role in transforming healthcare.
Founding Philosophy
Tananbaum shared the story behind Foresite Capital’s name, which was chosen over a decade ago when he predicted that healthcare would become a combination of genomics and AI, enabling personalized care. These areas remain at the forefront of the firm’s investment strategy.
Investment Strategy
Foresite Capital intends to invest in companies that are pushing the boundaries of healthcare through innovative use of genomics and AI. With its sixth fund now closed, the firm is well-positioned to continue its mission of transforming healthcare through strategic investments.
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