Healthcare-focused venture capital firm Versant Ventures is bucking the trend as it continues to actively locate deals and draw investors to fund startups.
“It’s an important time in venture investing in healthcare,” said Bill Link, who oversees its Newport Beach office as a managing director. “One of the market trends is that there is less and less venture capital available for early-stage investment in healthcare. That makes it an even better environment for Versant, since we have access to capital and can support new companies and continue to support portfolio companies.”
Versant is raising money for its fifth fund, with an aim of reaching $250 million. It’s well on its way and could start investing with the fund in the first half of the year, Link said.
The firm manages more than $1.6 billion in assets and has more than 75 companies in its portfolio. Link co-founded it in 1999 when it opened doors here and in Northern California. It has grown to additional locations in Minneapolis, Switzerland and Canada.
Versant’s various investments in 2013 included co-leading a $4.7 million Series A investment for Inceptus Medical LLC, an incubator in Aliso Viejo that raised the funds for its Inari Medical Inc.
Versant also participated in an $11 million round for WaveTec Vision, an Aliso Viejo-based developer of eye-surgery technology; a $30 million startup financing for San Francisco-based Audentes Therapeutics Inc. and a $30 million round for Laguna Hills-based Glaukos Corp.—just to name a few.
Incubator
It also kicked off an incubator in Minnesota early last year in a joint project with Rochester, Minn.-based medical practice and research group Mayo Clinic. The incubator was established shortly after Versant’s 2012 launch of its Minneapolis office. Versant Managing Director Kirk Nielsen moved from Newport Beach to head the regional office there.
Healthcare venture capital investments as a category have continued a downward trend in the U.S. for several years. Data from the National Venture Capital Association indicate that investments in biotechnology and medical-device companies totaled about $4.8 billion in the first three quarters of 2013. That’s slightly higher than the nine-month total for 2012—$4.7 billion—but below the $5.8 billion in 2011 and $7.1 billion prior to the recession in 2007.
“First-sequence” investing in the same category of companies totaled $614 million for the first nine months of 2013. That’s an increase of about 28% year-over-year but down by 22% from 2011 and by 118% from 2007.
“It’s viewed as a challenging time to raise a venture fund, especially one in the healthcare sector,” Link said. “We are very pleased that we’re making such nice headway.”
Versant’s presence as a source of capital gives OC’s healthcare industry a leg up on one of four key characteristics Link said are essential for “really thriving innovation activity.”
The other three: a strong academic presence; industry leadership; and highly skilled, motivated entrepreneurs.
“When you assess the local environment here, we come out with a very good score,” he said.
OC benefits from the mix of such traits, as they have contributed to the development of a vibrant and growing base of healthcare-oriented companies and education providers, including global drug company Allergan Inc. and device maker Edwards Lifesciences Corp., as well as the Gavin Herbert Eye Institute of the University of California, Irvine.
OC’s place as a center for healthcare businesses also has fed recent establishments of investor groups, such as Strathspey Crown Holdings LLC in Newport Beach. The private equity firm was founded in 2012 by former Allergan and Bausch & Lomb Inc. executive Robert Grant. It launched its first “lifestyle medicine” company in mid-2013, called Alphaeon Corp., and tapped Link as its chairman.
Link wasn’t always the investor type.
He is an engineer by trade, with doctorate, master’s and bachelor’s degrees in mechanical engineering from Purdue University. He also became interested in medicine and took a veterinary program at Purdue before serving as an assistant professor in the department of surgery at Indiana University School of Medicine.
“Big Step”
He then took “a big step to leave academia and go into industry,” moving to OC to establish American Medical Optics.
American Medical, now known as Abbott Medical Optics Inc., was acquired by Allergan in 1986 and later by Abbott Laboratories Inc. Abbott Medical’s former president, Jim Mazzo, last year joined Versant’s Newport Beach office as an operating partner.
Link also founded Chiron Vision, which he sold to Rochester, N.Y.-based Bausch & Lomb.
He got involved in investing when he joined Brentwood Venture Capital, which focuses on technology and healthcare companies. He had a nearly two-year stint there before founding Versant with six others.
“One of the things, personally, that keeps me very motivated is that when we are fortunate enough to do well, many people benefit,” Link said. “Patients, physicians that use the product and technology, the team that helped build the value and the investors—everyone is involved in that.”
Link said he also looks to his family as an “enriching and empowering” source of motivation. He met his wife, Marsha, in seventh grade, and they “basically grew up together.” They have two children and three grandchildren living nearby.
“The good fortune of having a solid family is something that helps me, for sure.”
