Northwest startups stand to benefit as Arch Venture Partners hands out $350 million

Arch Venture Partners http://www.archventure.com/ , the national venture capital firm that has emerged as a top player in Northwest biotech investing, has raised $350 million to sink into startup companies.

The new fund, collected from Europe, Asia, state university endowments and pension funds like the one for California teachers, will be funneled into about 25 companies over the next three to four years.

By Luke Timmerman
Seattle Times business reporter

http://seattletimes.nwsource.com/html/businesstechnology/2001877103_arch12.html

Robert Nelsen, an Arch managing director in Seattle, said the new fund will be parceled out like the $350 million fund Arch raised in 2000. Nearly half will be poured into biotech, with the rest steered into advanced materials, semiconductors and information technology.

Arch sees enough action in university and government-supported research institutions in the Seattle area that it could put close to $100 million of the fund into local companies.

"Our view of Seattle is positive," Nelsen said. "We’ll bring as much money as we can in here. We’re able to get in early, and we’re big enough that we can attract outside investors into companies."

Arch has a reputation for chasing technology ideas, such as anti-aging treatments, that large investors sometimes consider too risky. It has invested in more than 110 companies in its 18 years, traditionally putting more than one-fifth of its money into the Northwest.

The firm is known internationally for investing in companies such as Decode Genetics, the Iceland-based company that has created deep generational databases that examine how genetic variation causes disease. Locally, it has invested in Xcyte Therapies, a biotech trying to go public; Trubion Pharmaceuticals, a biotech startup with several Immunex alumni, and Impinj, a semiconductor company being closely watched by Intel.

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Arch Venture Partners

ARCH Northwest

1000 Second Avenue, Suite 3700

Seattle, Washington 98104

T 206 674 3028

F 206 674 3026

Founded: 1986

Locations: New York, Chicago, Seattle, Austin, Albuquerque

Capital under management: $1.1 billion, including the newly raised $350 million fund

Northwest biotech portfolio companies: Ceptyr, Regulome, Accelerator, Xcyte Therapies, NexCura, Ekos, Therus, Trubion Pharmaceuticals

Northwest technology portfolio companies: Impinj, Classmates.com, Midstream Technologies, Syncronex, Dantz, Netbot, CelebrateExpress.com, ProjectGuides, Asta Networks, Nimble Technology

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Arch was able to raise the money because few venture firms were soliciting at the same time and because its portfolio hasn’t been rocked as badly as others, Nelsen said. Finishing the fund raising, Nelsen said, will free up time to concentrate on putting the money to work in new companies.

Patrick Heron, a partner with Frazier Healthcare Ventures, the other large biotech investor with a Seattle presence, said the new fund will be a regional catalyst because Arch’s stamp of approval attracts investors.

Bruce Montgomery, chief executive of the Seattle biotech Corus Pharma, said the fund could breathe life into a biotech investment scene that has been somewhat flat.

The Arch fund represents some of the freshest money to hit the Northwest in a while. Rustic Canyon raised the previous new fund, $200 million last summer, to be partially invested here.

Nelsen, 40, a Northwest native who has worked for Arch his entire career, is known as a hands-on biotechnology judge, a prolific networker, and a wireless phone and e-mail addict. He said he’s eager to spend more time building companies.

"We’re not interested in incremental improvements, like going from a version 2.1 to 2.6," Nelsen said. "We’re interested in the difference between version 1 and 12, we’re looking for things that are way better. People are willing to pay for real fundamental, industry-disrupting technologies."

Seattle Times business reporter Tricia Duryee contributed to this report.

Luke Timmerman: 206-515-5644 or [email protected]