Eight years ago, the partners at Hatteras Venture Partners reserved 20% of their fund for seed-stage plays. The impact of sequencing was spreading, driving a trend toward more targeted drugs. And out of that initiative came G1 Therapeutics $GTHX and a number of other biotechs that have continued down their own paths.
“I think we were probably ahead of our time when we launched that,” says Clay Thorp, Hatteras co-founder and GP. “We’re really pleased with the resurgence in seed and early-stage companies.”
Looking ahead, Thorp and his colleagues at Hatteras now expect to up the ante on startups. This morning the venture group is unveiling the launch of fund VI, with the first $94 million up for grabs in a fund they plan to take to $200 million. As much as 45% of that will go to the seed portfolio — 6 to 8 companies out of a planned 16 to 18 venture-backed plays in total.
Thorp counts himself as a national investor in biotech, but just as they have a special focus on early-stage/preclinical companies, they also like to stay centered on new modalities like protein degradation or targeting RNA with small molecules, selectively making their picks as rival biotech groups take shape. And the Durham, NC group also likes to act locally when possible.
“Gene therapy and gene editing here is quite ripe,” Thorp tells me. “New areas of vectors or capsids or specially targeted vectors; we think this is a great place for that. Building on AAV, thinking of other ways to apply that technology” through in vivo targeting of immunotherapy, I/O and gene editing are all on the table.
“We’re just on the cusp now of seeing ways now that targeting capsizes and vectors can address cancer, immunology,” says the general partner. So don’t be surprised if you see some new investments along these lines.
Any new seed companies that make the grade may well follow the same path as G1, which started with $600,000 in preclinical money and ended at $15 million when it went public. On the high end, he adds, Hatteras may go up to $20 or $25 million in total through the launch and pre-IPO phase.
Thorp concedes that it isn’t always easy to find the right CEO and executive teams for these startups in the Southeast. But they’re also ready to put headhunters to work when needed to recruit. And they’re beefing up their own ranks to help facilitate this next wave of investments.
Mike Dial and Jeff Terrell have been promoted to partner, while Ben Scruggs has been recruited as a new associate and Kseniya Simpson joined the fund as analyst.
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