EXOME

all the information, none of the junk | biotech • healthcare • life sciences

Accelerator Adds $11.7M, Reels in AbbVie, WuxiTech to Back Startups

Xconomy Seattle — 

[Updated, 10:15 a.m. ET] Accelerator Corp. raised $51.1 million and made its long-awaited expansion into New York city last year, and at the time, CEO Thong Le mentioned that his company wasn’t done raising money for the effort. Today it’s added that cash, and a few new strategic investors to its pool of backers as well.

Accelerator, the 12-year-old startup creator from Seattle, has added $11.7 million in new cash to the fund it announced in July 2014. The new cash closes out Accelerator’s fourth fund at $62.8 million, and is supported by commitments from new investors AbbVie, WuXi PharmaTech, and Watson Fund. Former Takeda chief medical and scientific officer Tachi Yamada, currently a venture partner at Frazier Healthcare Partners, has joined Accelerator’s board as part of the funding. So have AbbVie executive James Sullivan and Peter Cheney, the former co-president of food manufacturing giant Mars Inc.

[Updated with CEO comments] Le told Xconomy this morning that the new cash will give Accelerator more financial flexibility for deals. “We could either make a few more new investments, or we could do slightly larger transactions,” he said.

The funding is the first announcement Accelerator has made since it revealed plans last year to open up an office in New York at the Alexandria Center for Life Science on the east side of Manhattan. Accelerator had talked for years about expanding to New York—Manhattan was a target because of the dearth of early-stage biotech venture capitalists on the ground—and it corralled a big group of industry players and others to support the move. Those entities include the the VC arms of three pharma companies—Eli Lilly, Johnson & Johnson (through Johnson & Johnson Development Corp.), and Pfizer (via Pfizer Venture Investments)—as well as the Partnership Fund for New York City and Harris & Harris Group. Accelerator’s existing backers, Alexandria Venture Investments, Arch Venture Partners, and WRF Capital, also took part in the initial $51.1 million raise.

Accelerator said at the time that more than half the cash would go towards its New York expansion, with the rest funding its Seattle base, where it’s helped build 12 early-stage biotech companies. And when I spoke to Le in August, he mentioned Accelerator was looking for about $15 million to $20 million more to top off the fund. Accelerator didn’t raise quite that much, but said that with the closed out round it’ll invest in a diversified group of early-stage life sciences opportunities, with a key focus on novel therapeutics.

[Updated with CEO comments] Le said today that Accelerator has just begun investing cash from Accelerator’s fourth fund, and that these new projects—which should result in “several new companies” before the end of 2015—will come from both New York and Seattle.

Many of those investments will come from the institutions Accelerator has partnered with.

In New York, for instance, Accelerator is working with Albert Einstein College of Medicine of Yeshiva University, Columbia University, Icahn School of Medicine at Mount Sinai, Memorial Sloan Kettering Cancer Center, NYU, Rockefeller University, and Weill Cornell Medical College. In Seattle, some of its partner institutions include Seattle BioMed, Seattle Children’s Research Institute, and Washington State University.

Le told me last year that Accelerator aims to make about one to three deals per year, in which it’ll form a company, put some seed money into it, and incubate it in-house. But he also noted that due to some past mistakes, Accelerator’s investment strategy was changing, that there’d be “a different level of discipline and focus” in those deals. And indeed, Accelerator, 14 months into its New York experiment, has yet to seed a startup from the city.

[Updated with CEO comments] Today, Le followed up with a similar sentiment. He said Accelerator has been making a concerted effort to get to know its partner institutions, craft business plans, and make well-conceived, “high-quality investments” based on their work. Accelerator’s New York office now has four full-time employees to get its first companies started.

“We can honestly say that we’re just about ready to go and will truly be able to help our companies get going without delay,” Le said.

Accelerator started up in 2003 when Leroy Hood of the Institute for Systems Biology teamed with a group of biotech venture capitalists and Alexandria Real Estate Equities to get behind startup biotech ideas that were too early for traditional VC investment. Since its founding in 2003, Accelerator has put some $45 million in venture capital towards the 12 early-stage biotechs in Seattle. The firm has now raised about $100 million total since its inception.