Ebb & Flow

While holiday shoppers do their best to melt their credit cards this season, look for MPM Capital to take a measured approach to spending its new $900 million fund, which closed last week. Mindful that the IPO window is non-existent, investors in the fund asked that the firm not commit the money any faster than three years, according to General Partner Luke Evnin.

In contrast, MPM was quick to invest its second fund - BioVentures II. It took only 25 months to fully invest that $600 million. "Because we invested BioVentures II so quickly, if we followed suit with fund III and the markets didn't open up, then we'd have two whole portfolios in illiquid markets, and that requires a heavy amount of work," Evnin said. Taking a slower pace with the new fund would allow many of the previous investments to mature, and thus require less fund oversight.

That said, MPM still plans to continue its strategy of putting large sums into individual companies. In BioVentures II, MPM did five deals in which it committed $30-$60 million. Not only did that quicken the pace of investment, it also gave the firm new leverage over other VCs at the bargaining table, according to Evnin. "We tested that strategy in fund II and now it's a proprietary component to our investment strategy. There are very few VC firms that can commit that type of capital," he told Ebb & Flow.

The firm will slightly bump up the biotech exposure of the new fund, to 80%, with the remainder going to devices and related health care investments. Earlier funds had 70-75% going to biotech. Similar to its earlier funds, MPM hopes to put 80% in U.S. companies (see "MPM's Larder").

MPM now has seven general partners. Last week, it hired Markus Hosang as a venture partner in the firm's Munich office, and promoted Robert Liptak to general partner from principal, while remaining CFO. Hosang previously was vice president and CSO of genetics and integrated medicine at Roche.

Lombard

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