Sprout Turns Into New Leaf

The venture firm formerly known as the Sprout Group has re-emerged as New Leaf Venture Partners (NLV Partners) and has closed a new fund with $310 million.

The firm says it began operations as NLV Partners last month. Its partners – the former managers of the Sprout Group’s Healthcare Technology team – are Managing Directors Philippe Chambon, Andrew Firlik, Ron Hunt and James Niedel in New York, and Managing Directors Jeani Delagardelle, Kathy LaPorte and Vijay Lahti and Vice President Hao Zhou in Menlo Park, Calif.

Sprout began as an affiliate of Credit Suisse First Boston, which is a limited partner and general partner in the NLV Partners fund. Other LPs in the new fund include California State Teachers’ Retirement System and Emory University, and returning Sprout LPs the Common Fund and the University of Michigan.

The new fund’s limited partners are roughly a 50-50 mix between new and returning LPs, according to Chambon. He says that the managing directors expected to have a newer mix of LPs due to the firm’s change in strategy.

“Sprout used to be a large and diversified venture fund and this is smaller and dedicated to health care,” Chambon says. “It does not necessarily appeal to the same range of limited partners.”

Chambon declined to discuss the new fund’s fee and carry structure, but he describes them as “standard.”

The new fund will focus on investing in clinical-stage biopharmaceuticals, early-stage medical devices and molecular diagnostic technologies. So far, the new fund has made one investment, a Series A deal in a medical device company that the firm expects to announce soon.

Sprout’s last fund (Sprout IX) became completely invested in new companies during the first half of 2005 and, according to Chambon, “dovetailed nicely” with starting investments from the new NLV fund. The new fund will invest in 20 companies, with about $15 million going to each. NLV Partners will continue to manage Sprout’s health care portfolio.

The move culminates a change started in late 2003 when the Sprout Group abandoned IT investing. It said it was spinning out its health care group to form Sprout Healthcare Ventures.

At the same time, the firm cut the size of Sprout IX by 25% from $1.44 billion to $1.08 billion and decreed that all future investments from Sprout IX would be health care investments.

Email Matthew.Sheahan@thomson.com