It takes a village
How VC 5AM will avoid strikeouts with its new early stage biotech fund
5AM Ventures isn't about to jump on the bandwagon with other early stage biotech venture firms that are raising large funds with the goal of forming smaller syndicates and retaining larger ownership stakes. Instead, the VC will invest its new fund using its long-time approach of providing the first institutional money for biotechs as part of a syndicate with multiple other VCs.
The firm thinks bigger syndicates decrease failure rates by enabling funding for longer periods of time and providing access to bigger networks to help find exits.
"We're trying to optimize for a fund size that's big enough to be at least equal owners in companies with other funds, but still small enough so that we're able to outperform financially and don't grow too big and end up doing too many deals," said 5AM's Andrew Schwab.
5AM disclosed the close of its fifth fund in an SEC filing on May 27 at $285 million, slightly more than its fourth.
The firm is looking for investments that have multiple shots on goal and can go from a series A