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independently raise capital for separate-but-related venture funds. They described their concept as a much smaller version of OrbiMed, the New York-based healthcare investment firm that manages a family of VC funds and has approximately $5 billion in assets under management.
It wasn’t clear to me what the different focus for each fund would be, except that each would reflect Royston and Fleming’s preferred investment strategy. Occasionally, they both would join in the same deal. It’s also unclear what kind of reception their independent-but-related approach will get from pension funds, endowments and other institutional investors who put money into new venture funds.
“Stan and I are going to be the general partner of each firm, adding people as needed to fulfill the objectives of each fund,” Royston says. Each fund would recruit partners to help manage the investments, but “associates become a luxury,” Fleming says.
The new funds will likely be smaller and more tightly focused, and Fleming and Royston say they will be working to align the investments from each fund more closely with the big pharmaceutical companies that represent the best exit for VC investments these days. He describes the separate-but-related funds as “kissing cousins,” and says they will operate under the same umbrella as “the Forward Venture family of funds.” They also envision a heavy emphasis on cutting their costs and increasing efficiencies, as Royston says, “because we can’t make money in biotech unless you can reduce the cost of the pre-clinical operations.”