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$50M Venture Fund Will Play to OC Strength

Aliso Viejo-based OCTANe announced that it’s raising a $50 million venture capital fund to invest in ophthalmology startups.

About $10 million has been raised so far, said Bill Carpou, chief executive of OCTANe, a network of investors that seeks to match investors with startups and other companies.

The Visionary Venture Fund will seek opportunities among ophthalmology companies throughout the healthcare industry, which counts Orange County as a center of the sector, with numerous eye drug and device makers here. The local presence owes in large part to Allergan Inc.’s emergence as a major presence in ophthalmology over the course of decades; its campus in Irvine is a significant research-and-development center.

Pfizer Inc. recently struck a $160 billion deal to acquire the Allergan brand.

Allergan spun off what is now Abbott Medical Optics in Santa Ana, and has seen members of its executive team go on to found or join various other companies with operations here.

“Ophthalmology is one of the fastest-growing segments of the market, and Orange County is the epicenter for innovation,” Carpou said. “We felt it made sense to create our own investment fund and even greater sense to have it focused on what Orange County leads the nation on—ophthalmic innovation,” he said.

Indeed, the new fund views ophthalmology as one of the strongest industry-growth markets in the healthcare industry, according to Carpou. The number of ophthalmology procedures is expected to grow at a 5% rate in coming years, he said. Recent data also indicates steady increases in the price of eye-related procedures, he said.

There’s also a substantial track record for venture capital investments in the niche, with ophthalmology-related enterprises drawing $1.3 billion worth of investments in 2014, the most recent year numbers are available.

The fund will draw investors from inside and outside OCTANe’s network, Carpou said. It intends to invest 50% of the fund in Series B or later-stage startups, 30% in Series A and the remaining 20% in some form of seed stage, he added.

OCTANe also has formed an advisory board for the new fund, with more than 20 representatives from the ophthalmology industry, ranging from Carpou to long-time veteran and industry executive Jim Mazzo. All 20 are both investors and advisors, Carpou said. The board members will help the later-stage startup companies—once they are funded—navigate the trajectory from development and initial funding to commercialization.

OCTANe had operated solely as a nonprofit until the announcement the Visionary Venture Fund. The fund will be part of OCTANe Capital, which has been established as a for-profit venture under the organization’s umbrella, Carpou said.

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