Atlas Venture, the Cambridge, Mass.-based early-stage, biotech-focused venture firm, has for the first time raised an opportunity fund designed to help it support its most promising, maturing portfolio companies.
The $250 million fund, announced by the firm this morning, is pretty well-timed, as these things go. Though the public markets have bounced back a bit today after several stomach-churning drops in late December, there seems to be growing agreement that 2019 could be a much tougher time for companies to raise funding than was the case last year.
As famed VC Fred Wilson wrote in a post yesterday about his predictions for this year, venture investors are likely to be far more cautious if the country continues to see a “difficult macro business and political environment.” It would “not surprise me to see total venture capital investments in 2019 decline from 2018,” Wilson wrote. “And I think we will see financings take longer, diligence on new investments actually occur, and valuations to come under pressure for even the most attractive opportunities.”
Many venture firms raised their biggest funds ever in 2018, partly because they could, and partly with the understanding that market corrections are inevitable. Indeed, some kind of downturn has been widely anticipated for at least the last year, given that the last global economic downturn began in 2008.
Interestingly, while Atlas managed to line up capital commitments as the year came to a close, another well-known firm that apparently didn’t get as far along as it wanted, August Capital, has put a pin in its fundraising process, according to Axios, which suggests that infighting played a role.
We wouldn’t be surprised to see other firms struggle to either close their funds, or be forced to scale down their ambitions, in 2019.
Atlas Venture has five investing partners: Kevin Bitterman, Bruce Booth, Jean-François Formela, David Grayzel and Jason Rhodes. Some of the firm’s bets include the cancer drug developer Bicycle Therapeutics, and Spero Therapeutics, which is working on antibiotics to treat drug-resistant bacterial infections.
Atlas has been investing in biotech since 1993, but the firm invested in both life sciences and IT until 2014, when it separated those businesses, with the Atlas Venture brand remaining associated with its biotech bets. The IT side became the seed-stage firm Accomplice.
Atlas’s previous fund was a $350 million earlier-stage pool of capital that it announced in 2017.