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 Vijay Pande, who previously taught chemistry, structural biology and
computer science at Stanford University, is taking the helm of the
new Bio Fund.
While much smaller than the venture firm’s last $1.5 billion general
fund, $200 million amounts to a substantial sum for a fund focused
on relatively niche areas such as digital therapeutics, cloud
technology in biology, and computational medicine.
In an interview Wednesday, Pande said he was eager to avoid the term
“biotech,” because of the image it evokes.
“Slow,” he said. “Risky. Expensive.”
Too many companies in biotech exemplify Eroom’s Law, he said,
meaning that even as technology improves, drug discovery becomes
pricier and drawn out. It is the backward image of Moore’s Law, the
observation that processing power for computer chips doubles about
every two years.
Instead, he sees the new fund investing in less capital-intensive
companies such as Omada Health, a startup backed by Andreesen’s main
fund that uses digital technology to tackle chronic conditions such
as obesity.
One of his first investments is twoXAR, a company that uses
specialized algorithms to identify promising drug candidates for
clinical testing. Because of its reliance on remote servers, he has
dubbed the sector in which twoXAR operates “cloud biology.”
While many venture funds have lost hundreds of millions of dollars
over the years to life sciences, the sector has picked up recently.
Last quarter, life sciences start-ups delivered $1.31 billion in
initial public offerings, more than any other sector, and $1.65
billion in merger activity, the National Venture Capital Association
said.
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Some software-heavy companies in medicine command lofty valuations
from venture investors, including doctor-referral service ZocDoc and
chip-based drug company Proteus Digital Health, valued at $1.8
billion and $1.1 billion, respectively.
The Bio fund will make roughly one Series A investment and 2-3 seed
investments quarterly, Pande said. Series A investments generally
start at a few million dollars while seed starts at a few hundred
thousand.
Pande has worked at Andreessen Horowitz for a year as a professor in
residence, connecting entrepreneurial academics with the firm.
In his new role, he becomes the firm’s 9th general partner.
(Reporting by Sarah McBride; Editing by Ken Wills)
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