With $25 million to spend, 5AM Ventures plans to be the lab rat for life sciences merchant bank Bay City Capital of San Francisco and Versant Ventures, a healthcare investor in Menlo Park, Calif. It will scout universities and research institutes for seed-stage drug discovery technologies.
The firm’s three partners-John Diekman, co-founder of Bay City, Carin Mueller, a Bay City investment manager, and Andrew Schwab, a Bay City principal-left Bay City in June. They snagged $12 million from Bay City and another $12 million from Versant, then added another $1 million of their own capital to hold a first close on their debut fund.
5AM, located across the hall from Versant, will continue knocking on the doors of strategic investors until the fund hits a target between $35 million and $45 million.
To date, 5AM has piggybacked on two biopharmaceutical deals, one led by Sprout Group and another led by Versant.
5AM invested alongside Sprout, Tavistock Life Sciences, CMEA Ventures, Novartis BioVenture Fund and others in a $43 million Series A deal for Kalypsys, a pathway-based drug discovery company in San Diego.
5AM ideally wants to be the majority investor in seed rounds that total less than $1 million and help shape a startup’s strategy, management team and technology. The firm will focus on drug discovery technologies and companies that use technology to identify therapeutic targets. It’s looking for scientists inside universities, corporations and research centers with ideas that are too early to form a company but who need funding to build a proof-of-concept.