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Morgenthaler Hopes to Boost Healthcare Investments with New $850M Fund

NEW YORK, Aug. 6 – Venture capital firm Morgenthaler has closed $850 million in a new fund that it will use to double its early-stage investments in the health-care sector, the company said on Monday.

Morgenthaler, with offices in Cleveland and Menlo Park, Calif., has in the past invested in genomics companies including Protogene, which develops DNA microarrays, and Sequana Therapeutics, now a subsidiary of Celera Genomics as a part of Axys Pharmaceuticals.

Company representatives were not immediately available to comment on how significantly the new fund would focus on life-science companies, but Morgenthler expects it to last between 24 and 30 months and offer an average per-company investment of $20 million.  

VentureWire, which covers trends in venture capital, reported on Monday that Morgenthaler would devote 10 percent of the fund to health-care companies and 30 percent each to software companies and makers of computer components. The remaining 30 percent will go toward buyouts of later-stage startup companies.

Morgenthaler also said it had added a new venture partner, Ralph Christoffersen, a former CEO of Ribozyme Pharmaceuticals, to help expand the firm’s biotechnology investments. Ribozyme, based in Boulder, Colo., is attempting to use ribozymes as therapeutics and has received venture money from Morgenthaler.

Morgenthaler’s previous fund of $570 million closed in early 2000. Thus far this year, genomics companies have received $126.6 million in venture funding, according to VentureWire.

“The combination of our higher capital allocation, our ability to invest independent of stage, and the addition of our new venture partner will enable us to expand our health-care position,” Robert Bellas, a general partner and head of the firm’s health-care practice, said in a statement.

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