MONTVILLE, N.J. – Hoping to take advantage of the venture capital market’s growing affinity for health-related investments, Crawford Capital officially launched its second fund, HealthTech Ventures II.
With a target capitalization of $250 million, Fund II is more than eight times larger than its predecessor, HealthTech Ventures I, which closed on $30 million in 1999. As such, the firm anticipates holding at least one interim close on its latest vehicle before shuttering it for good sometime in June, said David Rose, a managing partner with Crawford Capital. The specific dates of the interim closings have not yet been determined, he added.
The firm features seven managing partners who bring a combined 80 years of health-care and technology expertise to the table. As such, the new fund will invest mostly in early- and expansion-stage plays in medical devices, bioinformatics, biopharmaceutical and e-health-care companies.
“Three of the partners are M.D.s, which is why there is such a strong focus on health-care technology,” Rose explained. “We believe we have some of the strongest expertise in health-care [investing] in the U.S.”
A Bi-Coastal Strategy
Although the firm intends to expand its fold of limited partners to include a few strategic players, namely medical devices and pharmaceutical giants without their own venture arms, Rose said Crawford Capital also plans to approach its original investor roster to jump start its fund-raising efforts. Fund I’s LP list includes the usual pension and endowment suspects, in addition to a few small European pharmaceutical firms.
With offices in Montville, N.J., and Trabuco Canyon, Calif., Crawford Capital will focus on both the Boston-Baltimore corridor and the medical hotbed between Los Angeles and San Diego.
On average, Crawford Capital will invest in the neighborhood of $3 million to $5 million, but could potentially pump in an additional $5 million or more during follow-on investments. At that rate, HealthTech Ventures II should be fully invested in three years with a portfolio of about 25 companies, Rose noted.
In some instances, however, the firm also may operate in more of a merchant-banking capacity, injecting slightly larger amounts of capital into later-stage merger and acquisition deals, he added.
While Crawford Capital generally likes to lead the pack, it plans to set aside about one-third to one-half of the fund for co-investments with other prominent VC firms in the health-care arena, Rose said. He declined to reveal who some of those players might be.
Currently, the firm is already doing due diligence on several potential portfolio candidates, although it won’t likely seal any deals until after the fund holds its first interim close, Rose said.