Pappas Ventures Looks to Upsize for Fifth Fund

Given how so many biotech-focused VCs are faring in the fundraising market, it would make sense to ratchet down expectations. Not so for Pappas Ventures.

The North Carolina VC is said to be in the process of courting LPs for a fund that could exceed $300 million, peHUB hears from several sources.

Given that, according to Thomson Reuters data, Pappas Ventures has hardly raised more than $100 million in any of its prior funds, this might seem like a tall order. But factoring in Pappas Ventures’ backing of companies like Plexxikon (which was the biggest M&A exit of 2011 for VCs at $930 million) and biotech firm Tesaro, which went public late last month, on top of the VC’s existing portfolio and it seems that LPs will have numerous assets on which to bet.

The VC has typically done about a dozen investments per fund in biotech and life sciences companies. One source speculated that Pappas Ventures is looking to secure additional capital into its funds not to back a broader number of investments, but to provide greater balance sheet support for investments as they move later-stage. Most of Pappas Ventures’ existing investments are in early or expansion stage, according to Thomson Reuters data.

Sources tell peHUB that strategic corporates are investing in the new Pappas Ventures fund, as are some of their private pensions. Limited partners in prior funds have included the Indiana Public Employees’ Retirement Fund and the North Carolina Department of the State Treasurer, Thomson Reuters data show.

In 1998, Pappas Ventures raised its first fund, a $40 million vehicle. In 2000, the VC raised AM Pappas Life Sciences Ventures II at $102 million; in 2005 it raised a third fund at $108 million; and in 2009 it raised AM Pappas Life Science Ventures IV, another $102 million fund. Arthur Pappas founded the firm in 1994, and, according to its website, it has managed $350 million.

PeHUB could not get comment from the VC for this story.

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