Venture

Flagship takes on a pioneering new fund — and name — adding $285M to advance its startup mission

Flagship founder and CEO Noubar Afeyan

Flagship founder and CEO Noubar Afeyan

Flagship has become one of the most prominent blank-slate venture funds in biotech, creating companies from scratch in search of engineering major change in the way disease is treated. And it will begin 2017 with a new fund to invest in the continued growth of the companies it sparks into existence, along with a new name the Cambridge the MA-based group hopes will better reflect its mission.

It starts with a $285 million Special Opportunities Fund which will now operate alongside its $585 million Fund V, unveiled 21 months ago. And the venture group will be known as Flagship Pioneering as it starts its 17th year in 2017.

The idea behind the new fund, says founder and CEO Noubar Afeyan, is to “invest out of a separate pool of cash more intensely into the growth phase of these companies, for us to come in with a larger investment.”

This is something that hasn’t really existed in biotech, he says, pointing to a model that has worked in software, among investors like Peter Thiel’s Founders Fund.

You could just allocate funds differently in your main fund, he tells me, “but then you lose the diversification you want; don’t know what will be most successful.” This way, Flagship can choose to participate in the exponential growth phase, as it makes the most sense. And it brings its two funds now in play to $870 million, with $1.75 billion under management.

The name change, he says, is the outcome of some long running conversations among the partners, he adds. The bulk of what Flagship does best, he says, is devoted to starting with the research and creating companies with a blank slate.

Pioneering is all about going where there’s been nothing there before, says Afeyan. It combines frontier innovation, not incremental innovation, with startup entrepreneurship. It’s a “create-from-scratch mindset and risk required to do something never done before. That’s what we’ve become more and more specialized at.”


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