Radius Closes Fund II with $73.5M

Radius Venture Partners has closed its second fund with $73.5 million in its coffers. The New York-based firm’s fund, Radius Venture Partners II L.P., will follow the path of its predecessor and focus on health and life science investments. Since its founding in 1997, Radius has been dedicated to investing in the health and life science industry including medical devices, biotechnology, pharmaceutical, healthcare information technology and healthcare services.

“Our focus is consistent with our last fund, just bigger. We had set out to raised about $75 million to $100 million. I would have liked a little more, but we are very pleased,” says Daniel Lubin, co-founder and managing partner of Radius. “This fund was hard to raise, but we did it.”

Radius had been pounding the pavement touting this fund for 18 months and wrapped up fund-raising efforts toward the end of the 2002 fourth quarter. The firm’s limited partners are geographically widespread, with U.S.-based investors as well as international players. While Lubin would not disclose who the firm’s LPs are, he did say many of them sit on the firm’s advisory board, which includes Beckman Coulter Clinical Diagnostics Division, Columbia University, Banc of America Securities LLC, JP Morgan & Co. and Bain Capital. Additionally, the fund has been matched two to one by the Small Business Administration.

Although most of Radius’ LPs are just investors, that is not the case with Bain Capital. “We are fortunate to have this unique relationship with Bain. As a smaller fund, it gives us a cache that elevates our visability and helped us raise money from around the world. We have LPs from Europe, Latin America and Canada because of Bain,” says Lubin.

Lubin went on to explain that Bain and Radius often co-invest in deals. “We show each other situations that make sense. They are large, but have pockets of capital that have interest in health and life sciences. We play a helpful role in showing them opportunities. It’s a broad industry and it’s good to have a partner that you like and trust,” says Lubin.

Radius II is expecting to invest up to $5 million in each company for the life of the investment. While the firm has traditionally been focused on early-stage investing, it will branch out with Radius II. “We hope to have several PIPE investments. We are moving these companies onto our radar screen. We have an initiative to look at public companies that are at venture stage valuations. We can play a role in these companies, but can also have benefit of public market security,” says Lubin.

Founded in 1997, Radius raised a $25 million first fund that same year. That fund was sponsored by the SBA, invested in 17 companies and is fully committed. “The funds are really the same, but there really are some nuances right now. We’re seeing some really exciting later-stage companies at early-stage valuations. These companies are further along in the clinic and well past revenue stages. We can look at how to ramp them up and get a much better feeling as to whether they will be winners or not,” he says.

When all is said and done, Radius II will have invested in about 15 companies over the next four years.

Thus far, Radius II has made two investments from Radius II and co-invested once alongside Radius I. It invested in Zettacore, an early-stage nanotech company; Nugen, a platform discovery company; and in Health Language, a healthcare application software company with a solution for hospitals and health care systems. The investment in Nugen and Health Language came in the fourth quarter of 2002. Zettacore, which was funded by both Radius I and II, was funded in 2001.

Email Danielle Fugazy