Corporate Life Sciences VCs on the Rise in New England—the List

9/3/08

Some of the most exclusive clubs in the Boston area aren’t actually clubs at all, they are venture capital firms, where partners hold the power to turn ideas into companies—and make themselves a lot of money in the process. So perhaps it’s not surprising that some big companies would want to get in on the act as well. Nowhere does this seem to be the case more than in life sciences, where a variety of firms have set up venture arms in recent years to invest in ideas that might help fill their diminishing pipelines.

The ranks of Boston area life sciences companies with venture capital divisions grew last week with the launch of Covidien Ventures, the offspring of medical technology giant Covidien (NYSE:COV), based in Mansfield, MA. Then a few days ago we learned that a tandem of local life sciences corporate VCs— Genzyme Ventures and the Novartis Option Fund—were among the investors in a $45 million Series A round for newly hatched biotech startup Proteostasis Therapeutics of Cambridge.

Given this recent activity in the corporate VC arena, now seemed an appropriate time to list all the players we could identify in the Boston area. This list doesn’t include local corporate VC firms with single limited partners, such as Fidelity Biosciences and Navigator Technology Ventures. I also trimmed corporate VC groups located outside New England, which eliminates some big players such as Amgen Ventures, GlaxoSmithKline‘s (NYSE:GSK) SR One and J&J Development. Still, what remains is an impressive roster of outfits with literally billions of dollars at their collective disposal. (As always, let me know if I’ve missed any groups that should be on this list.)

Here they are:

Biogen New Ventures — Cambridge, MA and San Diego, CA
Corporate parent: Biogen Idec
Fund size: $100 million
Description: Biogen’s (NASDAQ:BIIB) venture capital fund, established in 2004, makes million initial investments of $5 million to $10 in biotech startups with science that complements its focus on the cardiovascular, immunology, oncology, neurology, and rheumatology markets. Perhaps to his chagrin, activist Biogen shareholder Carl Icahn has no influence—of which I am aware—on how this fund spends money.

Covidien Ventures — Mansfield, MA
Corporate parent: Covidien (formerly Tyco Healthcare)
Fund size: no fund allotment
Description: Even though fund head Dan Sheehan has been making the rounds in the Boston area for months, Covidien Ventures only debuted last week. It has no set fund, but proposes to invest up to $5 million in each round of financing of its portfolio companies; it’ll be interesting to see where the firm makes its first bet.

Genzyme Ventures — Cambridge, MA
Corporate parent: Genzyme
Fund size: $100 million
Description: This seven-year-old fund is best characterized as a weapon in the arsenal of tactics Genzyme (NASDAQ:[[ticker: GENZ]]) uses to further its well-known strategy of acquiring or licensing drug programs to grow its niche business in rare-disease treatments. (Recently, the company has begun to seek larger markets). By the way, it’s tough to get financing from this fund without Genzyme Chairman and CEO Henri Termeer’s personal stamp of approval.

MP Healthcare Venture Management — Boston, MA
Corporate parent: Mitsubishi Chemical Holdings
Fund size: $100 million
Description: Founded in 2006, MP Healthcare is just getting off the ground, building a team of both Mitsubishi executives from Japan and U.S. tech veterans. The fund has been quiet since I first came across it about a year ago, but it’s wired into the Hub’s venture capital scene through its limited partner status at Oxford Bioscience Partners.

Novartis Venture Funds — Cambridge, MA, and Basel, Switzerland
Corporate parent: Novartis
Fund size: $600 million
Description: The venture capital division of Swiss drug giant Novartis (NYSE:NVS) invests across the spectrum of life sciences startups, including those focused on biotech, diagnostics, and medical devices. The group recently established the Novartis Option Fund, armed with $200 million to purchase options to license certain programs at the startups in which the venture fund invests.

Partners Innovation Fund — Boston, MA
Corporate parent: Partners HealthCare
Fund size: $35 million (committed)
Description: Chances are your company doesn’t qualify for financing from this fund, which invests exclusively in startups with technology from Massachusetts General or Brigham and Women’s hospitals. The man with his hands on the purse strings is Robert Creeden, a former general partner of Boston venture firm Egan Managed Capital, who has served as managing director of the fund since its inception in 2007.

Siemens Venture Capital (Medical Solutions Fund)— Boston, MA
Corporate parent: Siemens
Fund size: $1 billion (Siemens VC total funds under management)
Description: Siemens‘s (NYSE:SI) medical fund, which reports to the industrial giant’s headquarters in Munich, invests in diagnostics, medical imaging, and healthcare IT firms in virtually all international markets (yet despite the Boylston Street address, no Boston-area investments are currently in its portfolio). Andrew Jay, a dentist-turned-financial-executive, is managing partner of this fund. His orders from Munich are to invest with both ROI and Siemens’ strategic mission in mind.

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