A new Silicon Valley-based venture capital firm led by a former partner at Durham’s Intersouth Partners plans to scour the Southeast – including the Triangle – for promising investment opportunities.
HealthQuest Capital, founded by Garheng Kong, is announcing Tuesday that it has raised $110 million for its first fund. Kong, who is the new firm’s managing partner, was with Intersouth, the Triangle’s oldest venture capital firm, from 2000 to 2010.
Kong said in an interview that he and his partners view the Southeast as the land of opportunity because the region has long been underfunded when it comes to attracting investments from venture capitalists.
HealthQuest has established offices in Atlanta and Gainesville, Fla., and considered opening one in the Triangle. But Kong ultimately decided that he would scout the region himself.
“My hope is that I will be able to ... cover that area and find some great investments in North Carolina,” Kong said. “I’m a big believer in the local RTP area but certainly the Southeast as well.”
Kong said his commitments already bring him to the state about once a month. He is chairman of Chapel Hill’s Cempra Pharmaceuticals and sits on the Duke University Medical Center Board of Visitors. He also is on the board of directors at Research Triangle Park’s Hamner Institutes for Health Sciences and at Laboratory Corp. of America, which is based in Burlington.
Kong’s ties to the Triangle are deep. He received a string of degrees from Duke University – an M.D., a Ph.D. in biomedical engineering and an M.B.A.
HealthQuest plans to invest in a range of life science companies – including medical device, diagnostics and health care information technology businesses – that already have a product that has obtained the required regulatory approval.
Triangle entrepreneurs have struggled to raise venture capital in recent years, a problem that many trace to the dearth of Triangle-based venture capital funds that are actively investing in new companies. The $22 million raised by Triangle companies in the second quarter, according to data compiled by PricewaterhouseCoopers and the National Venture Capital Association, was the lowest in two years.
Startup and early-stage companies rely on venture capital dollars to expand sales and marketing efforts or develop new products. The venture capital firms receive an ownership stake in the business in exchange for the infusion of cash they provide.
Kong left Intersouth to become a partner at Sofinnova Ventures, a Silicon Valley venture capital firm, in 2010. Last year he founded HealthQuest, which is relying on Sofinnova for its back-office functions.
HealthQuest doesn’t plan to invest in biotech companies that are developing new medicines, in part because that’s Sofinnova’s focus. In addition, the sectors that HealthQuest is targeting are even more underfunded than biotech companies, Kong said.
HealthQuest initially targeted raising $50 million for its initial fund, but ultimately managed to attract more than double that amount from institutional investors.