Avlar BioVentures launches second fund

Avlar BioVentures Fund II has raised GBP38 million in its first closing.

The fund hopes to raise GBP75 million, nearly four-times the amount of Avlar’s first fund. The purpose of this is to allow the company to make larger commitments and participate further in subsequent financing rounds of its portfolio companies. The final closing is anticipated before year-end.

The second fund will continue the firm’s existing investment strategy. The Cambridge-based investor focuses on pharmaceuticals and is also interested in therapeutics, medical devices, diagnostics, functional genomics, gene and cell therapy, drug design and combinatorial chemistry. The fund is aimed at seed and early stage companies although it is now capable of investing in all pre-IPO rounds, with no one company receiving more than GBP7.5 million in total.

Avlar will maintain its “hands on” approach to investments, to assist in this the company is currently in the process of recruiting two new investment managers, with further additions to follow. The fund is focused on Europe but, according to director, David Gough, will also consider a debut investment

in the US or Southeast Asia. He said: “We’re seeing a lot of approaches

from the US, that could be a sign that it’s more difficult to get venture capital funding there at the moment.” He also says Avlar is looking to foster

co-investment opportunities and build relationships with other VCs, including several as LPs in this fund.

For example, he hopes the association with Singapore-based Vertex will

help provide an entry route into that new market.

The investor’s first fund of GBP20.7 million closed in March 1999 and has made 11 investments and one exit. These include De Novo Pharmaceuticals that recently raised GBP16.75 million in further VC funding and Gendaq, a gene regulation company sold to Sangamo for $30 million.

Lloyds TSB Development Capital (LDC), a new investor in Avlar, has committed GBP10 million to the new fund. Steven Carle of LDC said: “Despite the recent turmoil in the biotech quoted markets, backing the right discoveries

at an early stage is essential. Our commitment…demonstrates our continued diversification into technology-related investment.” LDC is joined by Access Capital Partners and repeat investors Abbey National Treasury Services, BTG, Cambridge University, the European Investment Fund and Vertex Management.

Beeson Gregory is acting as sponsor and placement agent for the fund.