What better way to celebrate your 10th anniversary than raising an oversubscribed fund? Alta Partners did just that last week, holding a final close on $500 million for its eighth venture fund.
Alta Partners VIII not only beat its target by $75 million but found enough interest to raise $1 billion, says Dan Janney, one of three managing directors at the San Francisco-based firm.
Alta started fund-raising in March and quickly held a first close on $440 million, with most of that money coming from previous backers. It selectively added $60 million from new LPs—family offices, endowments and financial players.
Janney declined to name the LPs, but investors in previous Alta funds include Adams Street Partners, CalPERS (the California Public Employees’ Retirement System), Commonfund Capital Venture Partners, the Employee Retirement Income Plan Trust of Minnesota, Mellon Trust of New England, the Rhode Island pension system, and the Teachers Insurance and Annuity Association of America, according to Thomson Financial (publisher of PE Week).
Alta expects to invest about 80% of its capital in drug discovery and biotherapeutic companies and the rest in medical device makers. Its average investment will be $20 million to $25 million over the life of each company. The focus will be split evenly between early and late stage deals, although 60% is expected to go to late stage deals, which are more capital intensive.
Alta has not made any new investments from the fund yet, but is getting close to deals for two drug discovery companies and one medical device maker, Janney says.
The new fund features a slight change in the lineup from Alta’s two previous funds—Alta BioPharma Partners III, a $300 million late stage fund raised in 2004, and ACP IV, a $180 million early stage fund raised in 2004. Two general partners from those prior funds aren’t part of fund VIII: Jean Deleage, one of the firm’s four co-founders, and Alix Marduel, who has been with the firm since 1997. Both continue to be associated with Alta. Deleage goes by the title Founding Partner and remains “active and available to us,” Janney says. Meanwhile, Marduel will continue to manage her current investments, but she will not make new investments from the new fund, electing to spend more time with her family.
Besides Janney, fund VIII’s investment team is made up of Managing Directors Farah Champsi and Guy Paul Nohra (a co-founder) and Directors Alison de Bord, Ed Hurwitz, David Mack and Ed Penhoet.
De Bord, who joined Alta in 2001, was promoted from principal to director as part of the new fund. “Alison has done a terrific job at identifying late stage medical device opportunities and some nice drug development opportunities,” Janney says.
De Bord has already had two successful investments and has a third on deck. She was responsible for a PIPE for Esperion Therapeutics, a heart disease drug maker that was bought by Pfizer for $1.3 billion in 2003. She also led a second-round investment in medical device maker Kerberos Proximal Solutions Inc., which sold to FoxHollow Technologies (Nasdaq: FOXH) in August. (FoxHollow paid $32 million for the company, $13 million of it in stock, and it will make earnout payments in the second and third years after the sale.)
De Bord could see a third hit next year: She is credited with Alta’s investment in Insulet Corp., a disposable insulin pump maker that is expected to go public next year. Insulet’s backers are heartened by the fact that Johnson & Johnson paid $518 million for insulin pump maker Animas Corp. in December 2005. Insulet, a 6-year-old company based in Bedford, Mass., has raised $120 million in total venture backing, including a $50 million Series E in February from Alta, Pequot Capital, Prism Venture Partners, Versant Ventures and several others. —Lawrence Aragon