Like a lot of firms, the 41-year-old venture firm Menlo Ventures has decided to jump into healthcare investing after a long hiatus, hiring new partner Greg Yap to lead the charge.
A molecular biology major at Princeton, Yap was most recently the CEO of an early-stage medical startup called Pyrames, as well as an entrepreneur-in-residence with the year-old, life-sciences-focused venture firm Illumina Ventures. Going back a few years, he also managed a 200-person team at Ventana Medical Systems, a biotechnology company based in Arizona, and co-founded Biodesy, a three-year-old biotech company in South San Francisco.
Menlo's leap into healthcare isn't surprising. A growing number of IT-focused investment firms have grown to believe there is financial promise in startups that aim to solve biological problems through data, including via data genomics, diagnostics and synthetic biology.
Early-stage venture firm True Ventures was among the earliest to jump into the space, making what seemed at the time to be unusual bets on synthetic biology and neurosciences and generally wading back into markets that had previously been difficult to finance but that an underlying data revolution has made more capital-efficient.
In 2015, Andreessen Horowitz was among others to make its own big move into biotech, establishing a $200 million new fund called the AH Bio Fund to invest in mostly early-stage startups at the intersection of computer science and life sciences. It's the only sector-focused fund the firm has created to date.
In spring, the venture firm CRV also put bioengineering on its shopping list.
"Either these firms pivot or they’ll disappear -- they just won’t be relevant," as founder Stuart Peterson of Artis Ventures told us back in April of biotech investing. (Artis made a killing off the sale of cancer drug developer Stemcentrx to AbbVie last year for $10.2 billion. The firm led Stemcentrx's Series A round.)
For Menlo, the move is actually a return to healthcare investing, a practice it ended roughly 20 years ago, owing to the then capital-intensive nature of healthcare investing and what seemed like endless waits for FDA approval. As Menlo's longtime managing director Mark Siegel tells VentureBeat, most of the companies that Menlo will be chasing don't require FDA approval. “And for those that do, they will usually enter into a licensing agreement with a larger pharmaceutical company that will handle the FDA part.”
Menlo closed its most recent early-stage fund with $450 million in May.