Economic uncertainties haven’t put a dent in overall fundraising, but they have definitely made it tougher for new venture firms. US emerging managers (those with four or fewer funds) are on pace to raise 27 percent fewer funds this year than they did last year, based on my analysis of PitchBook data. This makes sense, since LPs tend to go with what they know during times of uncertainty.
If you’re looking for a great example of how to find success as a new manager, let me introduce you to Jenny Rooke, founder and managing director of Genoa Ventures, which this week closed on $84 million for its second fund.
Rooke started investing in start-ups about a decade ago, doing one-off deals to build a track record before raising her first fund in 2018. Based on the success of that first vehicle, she was able to attract institutional investors for Fund II.
Rooke got her start in 1998 at McKinsey & Co, advising pharmaceutical and biotech companies, then made the move to operations at US Genomics, followed by a couple of years as an associate at Fidelity Biosciences and a stint as a Kauffman Fellow. After working as a senior program officer for global health discovery at the Bill & Melinda Gates Foundation, Rooke took the plunge into the start-up world in 2013, moving to the San Francisco Bay Area and launching what she affectionately refers to as “Genoa Fund Zero.”
The fund, as it were, had a single investor, Rooke, who financed deals one at a time with her personal checkbook and, ultimately, by selling her home in Seattle. “I went all-in and really proved out the hypothesis that there was a need for these kinds of companies were biology meets technology that need life sciences expertise,” she told Venture Capital Journal.
Over the following years, Rooke continued to do one-off deals, finding like-minded individual investors on AngelList, while also working as a venture partner at Anterra Capital and then F-Prime Capital Partners (formerly Fidelity Biosciences). It was during that period that she realized she wanted to go to the next level. “It was focusing on those companies that really catalyzed my resolve to start a firm and raise a fund,” she said.
So, Rooke went onto AngelList and told the 200-plus people who had backed her previous deals that she planned to raise a venture fund and they were welcome to invest with no minimum check size. About 50 people took her up on the offer and she held a first close on $10 million. “From there, using that as an anchor and wanting to build a long-term franchise, I focused on the evolution of my LP base to more institutional investors,” she said. That led to her securing commitments from about a dozen professionally managed family offices and holding a final close on $30 million for Fund I.
With the money in the bank, the pressure was on to perform – and that’s just what Rooke did. She said her first fund ranks in the top decile for internal rate of return and total value-to-paid-in-capital compared with funds of a similar size and vintage. It has also notched one big exit – through the sale of Intabio to SCIEX in 2021 – which has allowed Genoa to return half of its invested capital to LPs, Rooke said.
The strong performance caught the eye of the University of Minnesota Foundation and attracted several more endowments and foundations that came via Crewcial Partners, an institutional investment consulting firm, who signed on for Fund II.
Rooke feels like her San Francisco firm is uniquely positioned to find success in its market, which she describes as the convergence of biology and technology. Genoa specializes in seed and Series A investments in startups working on innovations in tools used by researchers in labs, diagnostic tools and “engineered biology,” such as alternative proteins or methods to make crops resistant to diseases.
“The companies that Genoa invests in are product based,” she said. “They’re bringing tools and technologies to researchers, diagnostics to clinicians, crops to market. They are product based, and they need to think about commercial organization.” Those sorts of companies aren’t well suited for traditional life sciences investors, who “frankly have never been operators or put products on the market,” she said.
Genoa also has an edge over pure technology investors because it knows firsthand that the “the risks and challenges of biology-based enterprises are different than tech,” Rooke said. “Science sometimes doesn’t work, and if someone hasn’t run into that fundamental truth before, it can be very difficult to properly evaluate companies, to think about their risks, to capitalize them correctly and to be the right partner to them over time.”
Still, Rooke gets why more and more tech investors are anxious to get into biotech these days. “It is an extraordinarily exciting time for biology – the pace of innovation, the discoveries, the solutions that are coming to market,” she said. “I can certainly understand why that would capture the hearts and minds of the general public as well as tech and general investors.”