ARCH Venture Partners raises $400m

The US firm has raised $400 million for its seventh fund, to focus on early stage investments in biotechnology, advanced materials and specialty semiconductors.

University of Chicago spinout ARCH Venture Partners has raised $400 million (€272 million) for its seventh venture fund.

The fund is backed by investors from Europe, the US and Asia, including university endowments, corporations, pension funds, public institutions and private family foundations, the firm said.

The new fund’s investment strategy will be a continuation of its predecessors, the most recent of which closed on $350 million in 2004. The fund will invest in seed and early-stage companies commercialising “revolutionary” technology developed by universities, national laboratories and entrepreneurs.

The firm has followed this strategy since it was founded in 1986, when it spun out from a technology commercialisation initiative originated by the University of Chicago.

“Fund VII will target distinctive innovations in advanced materials, including novel developments in semiconductors, photonics and nanotechnology,” managing director Keith Crandell said in a statement.

The fund will also invest heavily in biotechnology, the firm said, which it has done consistently through its past funds as well.

“We have a firm belief that investing in fundamental biotechnology innovations is one of the few areas that wins in cyclical economies,” managing director Robert Nelsen said in a statement.

The firm now manages around $1.5 billion. It has invested in more than 120 companies, mostly from the concept stage, including network solutions company Xtera Communications, Elixir Pharmaceuticals and social networking website Classmates Online.