NEW YORK (GenomeWeb News) - The California Institute for Quantitative Biosciences, or QB3, is looking to raise $15 million for its spinout companies through a new venture capital fund created for that purpose.
Mission Bay Capital LLC is seeking to sell $8.9 million in securities after selling just over $6 million in a first sale on Aug. 26, according to its Notice of Exempt Offering of Securities, or "Form D", filed with the US Securities and Exchange Commission.
Funds raised by Mission Bay Capital would benefit startups commercializing technologies developed at QB3, which includes the University of California's San Francisco, Berkeley, and Santa Cruz campuses.
Outside investors must invest a minimum of $500,000 in the fund. Thus far, seven investors have invested in Mission Bay Capital as of the filing date, the notice stated.
According to the notice, filed last month, Mission Bay Capital will be run by a managing member, Mission Bay Capital Management, led by two QB3 executives — QB3 Director Regis Kelly holds the title of officer and director of MBCM, while Douglas Crawford, QB3's director of industry alliances and associate executive director, is listed as an MBCM officer.
A telephone message for Crawford was returned by a UCSF spokesperson who told GenomeWeb Daily News that QB3 would not discuss the formation of Mission Bay Capital until it was legally cleared to do so; exempt offerings are "registration statements" that, as with initial public offerings, are subject to SEC "quiet period" laws.
QB3 is among a few research institutes that have moved to create a funding source for startups at the earliest seed stages. In the Boston/Cambridge, Mass., region, Partners HealthCare operates the Partners Innovation Fund, a $35 million fund created in 2007 by Partners' founding members, Brigham and Women's Hospital and Massachusetts General Hospital.
The fund makes pre-commercial "development" investments in technologies developed by Partners members that are deemed to have high potential for commercialization, either through company formation or out-licensing; as well as equity investments in seed and early stages toward the formation of companies.
The Partners fund is structured as a separate limited liability company, as with Mission Bay Capital, and is evergreen; Partners reinvests all gains from investments back into the fund, with the goal of creating capital for additional investments.
"For the couple of thousand investigators and clinicians [in member institutions], the fund allows them to access very, very early funding to launch their projects," Michael Greeley, a member of the Partners fund's investment committee and a general partner with the Boston venture capital firm Flybridge Capital Partners, told GWDN.
"That's a model that seems to be working quite well," Greeley added.
Joining Brigham and Women's and MGH as members of Partners are Newton-Wellesley Hospital, North Shore Medical Center, Faulkner Hospital, Martha's Vineyard Hospital, Nantucket Cottage Hospital, McLean Hospital (a teaching affiliate of Harvard Medical School), MGH Institute of Health Professions, Partners Community Healthcare, and Partners Continuing Care.
Greeley also cited MIT's Deshpande Center for Technological Innovation, which has funded 'omics-related startups among more than 80 projects that have received a total $9 million in grants since the center was founded in 2002. Eighteen of the projects have spun out into companies that employ more than 200 people, and have raised more than $140 million in outside capital.
"That has been, at least in the New England area, a real beacon of success," Greeley said. "It is a really spectacular model."
QB3's interest in creating the fund comes as the institute looks to build on recent successes in commercializing technologies developed by researchers in the institute's three member UC campuses. QB3 houses six startups in a 2,500-square-foot, three-year-old incubator, dubbed "the Garage." One of the Garage's graduate companies, True Materials, was acquired for $25 million in cash by Affymetrix.
Companies must grow out of QB3, or move out, within two years.
This past summer, QB3 expanded its space for incubators one block east of the Garage, into a section of 409 Illinois St., the 239,000-square-foot building to which FibroGen, a developer of recombinant collagen and gelatin for medical device and pharmaceutical use, relocated its headquarters nearly a year ago. The space at FibroGen is one of several incubators QB3 plans to establish long-term around the San Francisco Bay Area.
QB3 opened the new incubator in partnership with the San Francisco Chamber of Commerce, and the San Francisco Center for Economic Development, as well as FibroGen.
About 6,000 square feet of the FibroGen space is occupied by a total nine startups, company spokeswoman Laura Hansen told GWDN on Thursday. "We've allotted 10,000 square feet but may consider allocating more," she said.