After a twenty-something-year hiatus, Menlo Ventures has decided to dive back into the health care sector. The Menlo Park, California-based venture capital firm announced today that it is adding Greg Yap as a partner to lead investments in health, medical, and life sciences technologies. The firm plans to invest 15 percent of Menlo XIV — a $450 million fund that the firm closed earlier this year — in early-stage companies at the intersection of biology and technology.
Founded in 1976, Menlo Ventures has a long history in biotech, including the incubation of Gilead Sciences, which raised $86.25 million in an initial public offering (IPO) back in 1992.
“We got out of life sciences in the mid-90s,” said Menlo partner Mark Siegel, in an interview with VentureBeat. “We found these companies to be extremely capital-intensive, with a lot of regulatory hurdles attached to them. A lot of other VCs got out at the same time or spun out separate, targeted funds.” He added that when compared to IT portfolio companies, life sciences companies often took 12 to 14 years to show returns, which is longer than the typical 10-year lifespan of a venture fund.
Today, Menlo Ventures is reactivating its investment in life sciences, while steering clear of companies that focus solely on drug development. The firm now targets the intersection of IT and health care, or companies that apply data to biological problems. These include drug discovery platforms, data genomics, diagnostics, synthetic biology, digital health, and more. “Most do not require FDA approval,” said Siegel. “And for those that do, they will usually enter into a licensing agreement with a larger pharmaceutical company that will handle the FDA part.”
Siegel and another Menlo partner, Matt Murphy, have already made some small investments in life sciences over the past few months. These include Synthego, Cofactor Genomics, Clear Labs, Recursion Pharmaceuticals, and 3T Biosciences. The idea, according to Siegel, is to now double down on these investments, which is why the firm decided to bring on an expert. “We realized it was harder to assess the science part,” he said.
Enter Greg Yap. The newly appointed partner has an extensive background in life sciences. From studying Molecular Biology at Princeton to cofounding Biodesy — which developed a technology that detects changes in proteins and other biological molecules — Yap is well-rounded. He also served as an entrepreneur in residence (EIR) at Illumina Ventures over the past year, advising and evaluating genomics-related companies.
Yap agrees that investing in life sciences is more complex. “I’ve been through a lot of challenges bringing products to market in the space,” he told VentureBeat in an interview. “From the health care system to FDA-approvals and regulations, the hurdles are numerous. When I was at Roche, we went through six different FDA approvals.”
In terms of deal flow, Yap argues that Silicon Valley does not have a monopoly on life sciences. Between San Diego, Boston, New York, Seattle, and Cambridge (U.K.), the field is wide open.
“We’ve increased our investments in international companies over the years,” said Siegel. “It’s not mission-driven, but sometimes the best companies are not in the U.S.”