Canaan Closes $800 Million VC Fund for Life Sciences and Technology

Venture capital firm Canaan Partners closed on a new fund, it’s twelfth, raising $800 million to invest. The company indicates the new fund will focus on healthcare and technology companies.

In a blog post, Canaan indicated they will expand in some sectors while keeping their focus the same.

“Canaan has a consistent approach to investing—pursue sectors with massive market opportunities, find the best people with the highest passion for their businesses, go as early as possible and partner closely with the leadership teams to help them achieve the mission," the blog post said. "Many say this, but we have lived it, through decades of experience: 66 IPOs and 141 M&As and yes, some failures too. Our intergenerational team and long track record in the business give us both grizzled wisdom, fresh ideas and rich networks.”

One of Canaan’s big hits in technology was grocery delivery company Instacart in 2012, which is now valued at $17.7 billion. In the biopharma area, investments have included Ideaya Biosciences and NextCure, both of which launched initial public offerings (IPOs) in 2019.

The firm believes it is a good time to invest despite very high valuations.

“These are probably the highest prices that we’ve seen in at least 20 years in venture, but at the same time the exit environment is incredibly strong right now,” Maha Ibrahim, a general partner at Canaan, told Bloomberg.

Canaan is also a bit unusual in the venture capital arena because 40% of its investment team is made up of women, approximately four times the industry average.

Other life sciences company investments have included Arvinas, Arakkis, and Synthekine, RallyBio, Day One, Stargazer, NextCure, PACT, GreyWolf and Pathios.

The company noted in its blog, “We are using the most advanced drug discovery tools and collaborative business models to drug new and known targets at Vivace and Tyra. We will continue our long history of investing in neurology, with a special focus on pain and neurodegenerative diseases. Current companies in this category include Nocion and Relievant, while previous companies include Semnur, Spinifex, Civitas and Minunus. To summarize, we are starting building and partnering to solve complex problems.”

General partner Julie Grant noted, “Unfortunately, when we say things stay the same, the unmet need in some therapeutic areas still exists. Immunology, oncology, ophthalmology, rare diseases, neurology—those are all still problems to be solved.”

She indicates Canaan plans to look for startups with multifunctional compounds, but won’t exclude startups with a single asset, particularly if that asset could be the solution to a particularly difficult and unmet indication.

“What you’ll see in our life science practice is we’re really pushing to be at the forefront of new targets and new modalities, and being in early,” Grant said.

Like other venture capital firms, such as Longitude Capital, Atlas Venture and Arch Venture Partners, the COVID-19 pandemic has been a trigger for large venture rounds. In April 2020, Arch closed on two new funds worth $1.46 billion. On the same day, Flagship Pioneering raised $1.1 billion for its seventy “origination fund” to support biotech startups. In September, Longitude raised a $585 million fund.

“I think it means that society is looking to high technology and biopharma to be innovation leaders, job creators and the standard setters for society going forward,” said Nina Kjellson, general partner at Canaan. “The world is looking to biopharma to get us back to work, back to school and back to play safely, and I think the attention on our particular industry has given a lot of hope to folks as we look for vaccines and therapeutics.”

Oct 14, 2020

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