A $50 million seed round and a $300 million Series A deal: These don’t sound like funding rounds taking place in a venture capital drought.
For some startups, especially in the biotech sector, this is turning out to be a surprisingly lucrative time to fundraise. “The challenge right now for the biotech investor scene is that the public markets have seized up for biotech, but at the same time, science is moving at a pace that’s unprecedented,” explained Amit D. Munshi, CEO of ReNAgade Therapeutics, which today announced a $300 million Series A round. “Positions are getting more concentrated, rounds are getting bigger, and they’re picking the winners,” he added.
ReNAgade raised financing from investors like F2 Ventures and MPM BioImpact, an early-stage biotech investment fund that also helped found the company. The startup is developing its platform for breakthroughs in RNA medicine, which has applications across medicine for vaccines and a whole range of therapeutic treatments for genetic diseases.
Biotech is also drafting off some of the A.I. hype that has enraptured VCs and inspired them to invest heavily in machine learning technology. ReNAgade is utilizing A.I. as it builds out its computational biology group with an A.I. machine learning platform, according to Munshi. Hippocratic AI announced its eye-popping $50 million seed round on May 16, which was led by biotech veterans Andreessen Horowitz and General Catalyst. The company was founded by Munjal Shah and aims to build A.I. language models for the health care system.
Yet even while A.I. companies across the board are attracting funding, experts argue that A.I. applications are particularly promising in the health care industry. [W]hen it comes to generative A.I., health care is an industry that we view as holding the most potential and measurable impact,” wrote a16z investors Julie Yoo and Justin Larkin when they announced their investment in Hippocratic AI. And A.I. is not new to health care—a host of companies have been using machine learning over the past decade. “In biotech in particular, what we’re seeing is that there’s already been a lot of proven use cases for A.I., and so there’s now just this mad rush of, ‘Okay, how many other use cases are there?’” explained PitchBook venture capital analyst Vincent Harrison.
Another reason early stage is so attractive right now is because these seed stage and Series A startups are further away from the rocky public markets, and therefore are shielded from some of the turmoil. For the health care and biotech sector specifically, this dynamic is compounded by the fact that moving a product through therapeutic clinical trials is a costly process. “With the IPO market still effectively closed, late-stage biotechs lack a key fundraising mechanism to cross the chasm between Phase 1 trials and acquisition. We believe the IPO market may reopen in 2024, in time for early-stage biotechs to go public on the standard timeline. This is likely to draw many would-be late-stage investors toward earlier stages,” explained PitchBook health care senior analyst Rebecca Springer.
As for founders that have been funded, they’re happy to be benefitting from the harsher environment. “Sometimes the tougher the climate, the better the vintage, and in these tougher environments, raising substantial capital and building the right team—we think that’s the plan for long-term sustainability,” said Munshi.
News from M&A land: Transact Holdings, a provider of payments processing for colleges, is getting closer to a sale. Transact has hired William Blair & Company, a Chicago investment bank, to advise on the process, according to three bankers familiar with the situation. Transact produces $70 million in EBITDA and could sell for more than $1 billion, they said. Reverence Capital Partners, the private equity firm founded by Milton Berlinski, Peter Aberg, and Alex Chulack, acquired Transact in 2019. William Blair declined to comment. Transact, Reverence, and Farol could not be reached for comment. —Luisa Beltran
See you tomorrow,
Lucy Brewster
Twitter: @lucyrbrewster
Email: Lucille.brewster@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
– ReNAgade Therapeutics, a Cambridge, Mass.-based RNA medicines biotech company, raised $300 million in Series A funding led by MPM BioImpact and F2 Ventures.
– Quanta Therapeutics, a San Francisco-based RAS-driven cancer treatment biopharmaceutical company, raised $50.7 million in Series D funding. Avidity Partners led the round and was joined by Sofinnova Investments, Vida Ventures, Surveyor Capital, Longitude Capital, BVF Partners, AbbVie Ventures, and others.
– TISSIUM, a Boston- and Paris-based privately-owned biomorphic programmable polymer development company for tissue reconstruction, raised €50 million ($54.02 million) in Series D funding. Fonds Stratégique des Transitions, Mérieux Développement, Cathay Health, Credit Mutuel Innovation, and Sofinnova Partners invested in the round.
– ClearMotion, a Billerica, Mass.-based user experience software development company for vehicles, raised $32 million in funding. NewView Capital, Acadia Woods, BAI Capital, NIO Capital, Liberty Street, and others invested in the round.
– Logik.io, a Chicago-based B2B buying experience company, raised $16 million in Series A funding. Emergence Capital led the round and was joined by ServiceNow Ventures and Salesforce Ventures.
– Lifeforce, a Santa Monica, Calif.-based health optimization platform, raised $12 million in Series A funding. M13 and Peterson Ventures co-led the round and were joined by Ridgeline Ventures, Rosecliff Ventures, and Seaside Ventures.
– Volition, a San Francisco-based online industrial parts marketplace, raised $11 million in seed funding co-led by Newark Venture Partners and Quiet Capital.
– Faye, a Tel Aviv-based travel insurance company, raised $10 million in Series A funding. Munich Re Ventures led the round and was joined by Viola Ventures, F2 Venture Capital, and others.
– CyberVadis, a Paris-based third-party cyber risk management platform provider, raised €7 million ($7.57 million) in Series A funding led by Zobito.
– LEADOPTIK, a San Jose-based medical imaging company, raised $5 million in seed funding. MetaVC Partners led the round and was joined by SOSV, Sony Innovation Fund, TSVC, ENEA, and others.
– PYOR, a Bangalore, India-based data and insights provider for the digital assets industry, raised $4 million in seed funding. Castle Island Ventures led the round and was joined by Hash3, Antler, Future Perfect Venture, Force Ventures, CoinSwitch Ventures, Coinbase Ventures, and angel investor Balaji Srinivasan.
PRIVATE EQUITY
– Amulet Capital Partners acquired Alliance Clinical Network, a Dallas-based clinical site platform. Financial terms were not disclosed.
– Fortress Investment Group and Mubadala Investment Company agreed to acquire 90.01% of the equity of Fortress, a New York-based investment manager, from SoftBank. Financial terms were not disclosed.
– Patriot Pickle, a Swander Pace Capital portfolio company, acquired First Place Foods, a Garland, Texas-based pickled vegetables provider. Financial terms were not disclosed.
OTHER
– Mizuho Financial Group agreed to acquire Greenhill & Co., a New York-based investment bank. The deal values the company at $550 million including debt.
– Multiverse acquired Eduflow, a Copenhagen-based social learning management platform. Financial terms were not disclosed.
IPOS
– Advanced Biomed, a Taiwan-based microfluidic testing equipment developer for early cancer screening, filed for an initial public offering.
PEOPLE
– Axxes Capital, a Coral Gables, Fla.-based private investment firm, hired Gary Bachman as CFO and Kirk Kazanjian as CMO. Formerly, Bachman was with GQG Partners and Kazanjian was with Capital Group.
– Highland Europe, a Geneva- and London-based growth investment firm, hired Abhishek Lahoti as head of platform. Formerly, he was with Sapphire Ventures.
