InterWest heads toward final close

InterWest Partners, an IT and life sciences venture firm, has almost completed raising its 10th fund, as it has garnered commitments from several public institutions.

One source familiar with the Menlo Park, Calif.-based firm says that the firm’s target is between $500 million and $700 million, which would be in line with the $600 million it raised in 2004 for InterWest Partners IX.

Investors in the fund include the Pennsylvania State Employees’ Retirement System, which recently committed $30 million, and the San Francisco Employees’ Retirement System, which contributed $10 million, according to public documents.

A spokesman for InterWest declined to comment, citing regulatory restrictions associated with the fund-raising process.

Meanwhile, InterWest is investing at a breakneck pace. It has backed 31 companies so far this year, which puts it on track to top the 56 companies it backed in 2000, according to data from Thomson Reuters (publisher of PE Week).

The firm has split its investments between health care and technology almost equally in the past, committing 50% of its money to semiconductors, communications, software and Internet startups and 50% to biotech, medical device and pharmaceutical companies.

So far this year, however, the firm has backed 20 health care companies and 11 information technology companies, according to data from Thomson Reuters.

InterWest is also taking an active role in incubating startups from its offices. It backed Arcion Therapeutics, a pain management company, in a $8.8 million Series A in January, for example. The company was founded by Executive-in-Residence Jim Campbell, a professor of neurosurgery at Johns Hopkins University.

It has since added another executive-in-residence, material science Ph.D. Drew Hoffman, who is currently CEO of InterWest portfolio company Synvascular. The medical device company received a little more than $6 million from InterWest and Kleiner Perkins Caufield & Byers in March.

The only known exit for the 2004 vintage fund has been the public offering of Saint Paul, Minn.-based medical device company EnteroMedics (Nasdaq: ETRM). The company uses electrical pulses to block nerves associated with the sensation of stomach fullness and has seen its stock tumble nearly 50% since its November 2007 offering.

Prior to its IPO, EnteroMedics raised about $64 million in funding from InterWest, MPM Capital and other investors.