Durham venture capital fund Hatteras Venture Partners plans to announce Monday that it has raised more than $90 million for its fifth investment fund, giving it roughly 60 percent of its $150 million goal.
“We’re humbled and gratified that people would continue to have this level of confidence in us,” said Clay Thorp, co-founder and general partner.
As with its earlier funds, Hatteras plans to use the money to invest in seed and early-stage investments in biopharmaceutical, medical device and other life science companies. Venture capital firms receive an ownership stake in the companies they invest in.
Hatteras, which now has about $350 million under management, is continuing to raise money from investors for its new fund. But its success so far is welcome news for Triangle entrepreneurs, who often complain they are at a disadvantage compared to their counterparts in the Silicon Valley and Boston because of the dearth of venture capital firms in the region. Venture capital firms like to invest in companies close to home so they can keep an eye on their investments.
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Hatteras doesn’t limit itself to investing in local startups, but Thorp said the firm considers 13 of the 26 companies it invested in via its last two funds as North Carolina investments. That is, the companies were either founded or headquartered in the state or had significant operations here. Hatteras invested $65.8 million in those 13 companies.
Those businesses have raised an additional $420 million from elsewhere, demonstrating “these are good companies that other investors are interested in,” Thorp said.
“We feel like North Carolina is the next great hub for life sciences,” he added. “There are going to be even greater opportunities in the future than there are today.”
Among the general partners at Hatteras are: Robert Ingram, former CEO of Glaxo Wellcome, now GlaxoSmithKline; Kenneth Lee, former co-head of the international life science practice at Ernst & Young; and Christy Shaffer, the former CEO of Inspire Pharmaceuticals. Thorp’s brother Holden Thorp, the former UNC chancellor and now provost at Washington University in St. Louis, is a part-time venture partner.
Thus far Hatteras has raised money for its fifth fund from more than 20 institutional and individual investors, including UNC-Chapel Hill, GlaxoSmithKline, LabCorp and Malin, an Irish investment and management company focused on the life science industry. Hatteras also has forged a strategic partnership with Malin, which raised more than $370 million in an initial public offering in March.
“We regard Hatteras as an absolutely first-class operation within the U.S. venture industry,” said John Given, Malin’s chairman, who disclosed that Malin invested more than $15 million.
Teaming up with Hatteras, said Malin, gives the Irish company access to, and expertise regarding, early-stage investments that it otherwise lacks. He said Malin could end up co-investing in conjunction with Hatteras on some deals.
A number of Malin’s executives and members of its board of directors have roots in Irish drug company Elan Pharmaceuticals, which was acquired for $8.6 billion in 2013. Ingram, the Hatteras partner, was chairman of Elan at the time of the sale and is on Malin’s board.
Both Thorp and Given said Ingram recused himself from both sides of the deal between the two companies.
Given noted that Malin and Hatteras have a history together. Both companies are investors in Durham’s Viamet Pharmaceuticals, a company whose co-founders include Holden Thorp.
Hatteras is looking to exceed its $125 million fourth fund. Of that amount, $95 million came from investors. It gained access to an additional $30 million by being licensed by the Small Business Administration to receive government-backed, low-interest loans. Hatteras was the first venture capital fund in the nation to receive such a license under the agency’s Early Stage Innovation Funds initiative.
Most venture capital firms don’t invest seed capital in raw startups, but Hatteras does via its Hatteras Discovery business led by Shaffer. As it did with its last fund, Hatteras is allocating up to 20 percent of the money it raises to Hatteras Discovery, which was formed in 2011.