Peter Kolchinsky and Raj Shah's RA Capital has $461M more to play with, after 'rapid' investment in the last 15 months
Just over 15 months after launching its first venture fund, RA Capital Management is ready for more. And this time the firm is bringing an even bigger load of cash to the table.
Announcing the close of its Nexus II fund on Wednesday, RA said it raised $461 million for investments in private companies across the biotech industry. The first venture fund, which raised $300 million, has churned through roughly 80% of its capital already, a pace that managing partner Raj Shah called unusually quick.
“Obviously there were some opportunities that occurred because of Covid-19, and then there were just many across a variety of therapeutic areas that ultimately were compelling to us,” Shah told Endpoints News. “Based on our deal flow and what we saw, we ended up investing at a pace that was more rapid than I think is typical and than what we had intended originally.”
The new fund will largely build off the first, and though the cash pool is still separate from RA’s main fund, the focus will remain in the life sciences arena, Shah said. Nexus I saw investment across 18 distinct areas and funded 59 companies, 15 of which have gone public or have been acquired.
RA’s main fund invests not only in private companies but also participates in follow-on investments as well as newly-public companies, Shah said.
Shah doesn’t expect the Nexus II money to be invested at a similarly quick pace, though he did say the plan is for Nexus II to be a 10-year fund. That way, RA can stay flexible with whatever investment opportunities might come about.
Originally founded by Shah and Peter Kolchinsky, RA has built up a team of more than 90 employees including over 30 scientists and researchers over the years who pore over all the data and catalog emerging trends, managing director Josh Resnick said. Every life sciences VC has its own approach to investing, but the size of that division — called TechAtlas — is fairly atypical within the industry and allows the firm to keep up with all the innovation that’s going on in the field right now.
“That gives us a ready source of systematically mapping and categorizing it,” Resnick said. “What that allows us to do really is put any investment opportunity quickly into its context so that, rather than rushing to try to understand something from first principles, we are ready to react to most opportunities, frankly, because we know where they fit into the market and into a competitive space.”
At the end of the day, it’s still mostly about the money. RA narrows their choices down to the technologies and R&D that it feels can be the most “disruptive,” Shah said, with the potential of becoming the standard of care within five to 10 years.
Though RA isn’t divulging specifics about what it’s looking at right now, Resnick added they never say no outright to anything.
“We’re lucky enough to have the capabilities to be somewhat abreast of pretty much every therapeutic area and so respond to things on their merits,” Resnick said. “Obviously there will be some that are more investable than others, but there’s no area that’s closed off and there’s no area where we say, ‘We’re going to do X amount in this year.’”