Hatteras Venture Partners, one of the Triangle’s most important biotechnology investors, has raised more $137 million for its newest fund, creating a significant amount of capital that could be used in the region’s fast-growing science sector.
The new money, revealed in a recent filing with the Securities and Exchange Commission, comes as the investment group had a banner year in terms of its portfolio companies going public.
Just last week, Shattuck Labs, a Research Triangle Park-based company developing treatments for cancer, raised $200 million through an initial public offering on the Nasdaq stock exchange.
That IPO came just three months after Hatteras was part of a $118 million investment round into the company. That’s a record turnaround for an investment by Hatteras, though its shares in Shattuck will be locked up for several several months, said Douglas Reed, a general partner at Hatteras.
“Three IPOs in a year is pretty good for us,” Reed said in a phone interview. He added that Hatteras is invested in several other companies that could be ready to go public soon as well, including Durham-based Ribometrix and StrideBio, a gene-therapy company spun out of UNC-Chapel Hill.
The firm routinely invests in promising companies emerging from local universities and helps them grow.
Hatteras’ recent success is fueling its newest round, the firm’s sixth in its history. The investment firm raises a new round every four years or so, Reed said.
The newest one, fund VI, is larger than the previous two, according to filings with the SEC. Fund IV had around $75 million in commitments and Fund V had about $91 million.
“The goal is for us to be involved in successful companies,” Reed said. “That does well for our investors, and it does well for the region.”
“The more successful we are the more capital we can raise to do this in a bigger way,” he added. “And then we can invest in more of these companies, which is critical for the region.”
Hatteras was cofounded by Clay Thorp with the intentions of investing in seed and early-stage investments in biopharmaceutical, medical device and other life science companies. The company has more than $550 million in capital commitments.
Its general partners include some influential names in the biotech world, like 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.
Holden Thorp, the former UNC chancellor, is also a partner at the firm, and Sir Andrew Witty, who led GlaxoSmithKline until 2017, is an adviser.
Hatteras doesn’t solely invest in North Carolina, though the state does get the largest share of its money. Of the 42 companies it is currently invested in, 15 are based in North Carolina, according to the company’s website.
Reed said it is important to have strong local investment groups in North Carolina, as it can still be difficult to get investors from Boston or California to travel to the Triangle.
“We wish we had more capital (in the Triangle),” he said. “We would actually be happy if there was another biotech venture firm here. It is helpful to have more capital and more hands on hand to do work and offer different perspectives.”
Like most investment companies, Hatteras is benefiting from one of the strongest IPO markets in years, with dozens of notable tech companies going public this year. Despite the pandemic, stock markets have had a pretty strong year, with money flowing towards companies that promise fast growth, in part because interest rates are so low right now, Reed said.
Venture capital firms are also raising record levels of cash right now as well, The Wall Street Journal reported. And in North Carolina, startups raised more money in the first six months of 2020 than the first halves of both 2019 and 2018, The News & Observer reported.
Another Triangle investment company, Bull City Venture Partners, is also raising money for a new fund. Bull City said in a recent SEC filing that it is trying to raise $50 million. Jason Caplain, a cofounder of the firm, declined to comment about its newest fund.
“There has almost never been a more open window to raise money in the (stock) market,” Reed said. “It is not likely to last much longer, but it will come back again. It happens in cycles, and we have several companies that might be ready in one to two years.”
In the meantime, the Triangle’s biotech companies have not seen much of a slowdown because of the pandemic, an original fear of Reed’s.
“Frankly, if anything, we feel busier than we have ever been,” Reed said. “Part of that is science keeps developing at a faster and faster pace. As that happens there gets to be more practical applications that can be developed into potential products.”
“It is really shocking in some ways how fast these things are turning into opportunities. Crispr (a tool that allows precise genome editing) was not that long ago,” he added. Now “the Triangle has really become a leader in the gene therapy space.”
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
Original Article Source: News & Observer