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Thursday, Feb 22, 2024

VC WANTs Smart Money

 Venture capital firm Westlake Village BioPartners has provided a spark for growth among Conejo Valley biotech firms, first with its local presence announced two years ago, and now with two funds totaling $500 million announced in December.The first fund is a $70 million stockpile called Opportunity 1. The firm will use the money to further invest in companies it has incubated or already invested in. The larger Westlake Village BioPartners 2 Fund, worth $430 million, will invest in approximately 12 new portfolio companies; the firm will pull from this fund to co-lead Series A financing rounds with other investors.To date, the VC firm has raised $820 million to grow biotech startups.Seven of Westlake Bio’s startup companies are or will soon be located in Westlake Village, according to Dr. Sean Harper, co-founding managing director for the venture capital firm and a former Amgen executive.Immunology startup Acelyrin is one such portfolio company to be headquartered at the campus out of the firm’s second fund, along with other companies still in stealth mode, Harper said.Co-founders Harper and Beth Seidenberg live in the area, and after years of advising local universities on luring venture capital firms here, decided to form one themselves.“I’d go in and talk to the president of the university with other advisors. … I’m telling them the big problem is you really don’t have the right kind of venture capital firm here, you need to get someone like Atlas Ventures or whoever that does this kind of company incubation, or Kleiner Perkins where Beth was,” said Harper. And Harper wasn’t thinking of firms looking to add another client to the portfolio. A successful biotech hub needs a firm that has industry experience and knows the close-knit communities of scientists and is savvy enough to take a calculated risk.“What was missing here was venture capital that was knowledgeable on how to build companies in biotech from scratch, had meaningful capital to deploy, and had the kind of R&D expertise that we bring to bear,” Harper added. “I do feel that it’s been a catalyst to what was already a lot of pent-up demand in the area here, but we needed that catalyst.”Not remote workFor biotech VC firms, “you really need to be quite close with the companies, the founders, in particular the entrepreneurs, the CEOs, the team,” Harper explained.That’s especially true in terms of startups, or companies in incubator space. Harper thinks that larger companies such as Amgen Inc. and Merck & Co. might be able to do more remote work because people already know each other well, and the corporate culture is already set.“If you think about starting a company up from scratch, there is an enormous amount of work that needs to be done to establish the corporate culture, to make sure the team gels, that the people understand how to work together,” Harper told the Business Journal.Then there’s the nature of a company focused on pipeline R&D — most of the work needs to be done in person, in a lab. VC firm guidance and oversight needs to be in person too.“We do have people, like chemists, that can do in silico, molecular design on a computer, but there are a lot of people who need to be physically in the laboratory,” said Harper. “Even though right now we’re doing a lot of things over Zoom, I also go into the Alexandria building at Rancho Conejo and meet with the teams and see CEOs there, and we’re able to do that safely.”Harper is already seeing other industries follow the money to Conejo Valley, with Alexandria Real Estate Equities building lab space in the hub, and Charles River Laboratories planning to build vivariums here.Given its wide geographic scope, Harper expects Los Angeles to look much like San Francisco does now, with Conejo becoming one of many life science hubs.“There’s nothing magical about being in Westlake Village versus Pasadena or Culver City. If you look at the Bay Area, there are four to five hubs with biotech –  it’s not one place like it is in Cambridge, Massachusetts,” Harper said.Even in Boston, the hubs are becoming more spread out; companies are moving to the city’s periphery for more space and lower rents.To make the Conejo hub even more successful, it will need more than one of everything, Harper said. That means dozens of VC firms, more large companies, more real estate firms, more professional services that cater to the industry.“If you looked at it objectively, you wouldn’t want it to be dominated just by one VC firm over the long term, that probably isn’t healthy,” Harper said. “It would be welcome to see more venture participation in the companies in this area just because we want to see the ecosystem grow. There are other VCs that are increasingly either co-investing with us, which is a great model, or just starting companies up on their own here. I think that is good for the ecosystem.” – Amy Stulick

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