Growth equity firm NewVale Capital officially broke cover with its $167 million fund on Monday morning to back third-party service providers that support the drug development industry.
The Boulder, CO-based firm, which has already backed three companies, had originally sought $125 million, founder and managing partner Todd Holmes told Endpoints News. Its limited partners include long-time biotech investors, including university endowments, foundations, insurance companies, family offices and unnamed “recognized pharmaceutical executives.”
A lot of the innovation in drug development has shifted toward smaller and medium-sized biotechs as compared to the old days of pharmaceutical companies driving most of the new drug approvals, Holmes said. With that comes a reliance on more third-party services providers, like contract research organizations and CDMOs, to get a medicine from discovery to approval, he said.
“We’ve gone from an industry that outsourced maybe 20% of all activity 20 to 30 years ago, to now more than 50 cents of every dollar invested in biotech goes right out the back door to somebody doing the work,” Holmes said.
“It’s an industry that’s now relying very heavily on this, call it ‘exoskeleton’ of services, that allow them to dial in and out of costs and expertise in a way that they couldn’t do even 10 years ago,” he added.
Holmes formed NewVale in 2022 after two decades as an industry investor at other funds, including BVF Partners, Third Rock Ventures, Gurnet Point Capital and fellow Boulder firm CRG.
The firm began investing in early 2023 and plans to back up to eight companies with its inaugural fund. Check sizes will range from $10 million to $50 million. It’s got about four-fifths of the fund left to deploy, Holmes said.
NewVale’s portfolio includes Argonaut Manufacturing Services, biostatistical software company Beaconcure and machine learning company Aizon, which caters to biopharma manufacturers. The firm’s leaders include executive partners Patrick Lee and Rich Fante, and operating partner Scott Waldman, a former chief strategy officer at Lonza.
The fund invests in companies that already make money and have customers, Holmes said. It doesn’t invest in drug development biotechs, he noted.
“It’s all about execution in this window,” he said. “It’s not about new ideas. It’s about the old ideas that are working.”
NewVale joins at least a dozen other inaugural life sciences funds that have been unveiled in the past 18 months, including the corporate VC Regeneron Ventures, Scion Life Sciences, Dimension and others.