SAN FRANCISCO — Andreessen Horowitz is launching a new $200-million fund aimed at increasing its investments in bio-software companies, the venture capital firm announced Wednesday.
Leading the charge will be general partner Vijay Pande, a former Stanford University professor and until now, the firm’s liaison with academic institutions. Startup veteran Pande says he’ll be focusing on companies working in the emerging intersection of software-based computing power and health-focused research.
“Biotech investments, which often focus on drugs and devices, have always had a difficult ROI (return on investment), and what we’re targeting with our fund is fundamentally different,” Pande tells USA TODAY. “This is a really exciting time, with new trends coming together and the cost of computing power and things like genome sequencing coming way down.”
Pande says the Palo Alto, Calif.-based venture firm, which was founded in 2009 by Marc Andreessen and Ben Horowitz, and whose scores include Skype, Airbnb and Oculus VR, will hone in on three investment categories: digital therapeutics, cloud biology and computational medicine. The first refers to companies that lean on digital technology and smartphone ubiquity to help patients with issues such as post-traumatic stress syndrome, providing real-time and on-demand counseling. The latter two leverage cloud-based storage and computing power to lower the cost of doing science and therefore increase the odds of revolutionary discoveries.
“In the past, you had to have many, many people in a room doing research experiments over and over to hope to have success (with a scientific trial), and that costs money,” says Pande. “But by using robots in a lab and by being able to aggregate data, you’re now creating a situation where a few people in a garage could be behind big breakthroughs.”
Beyond holding leading roles in the chemistry, structural biology and computer science departments at Stanford, Pande also is behind a startup called the [email protected] Distributed Computing Project for disease research, which applies computer science techniques such as machine learning to biology and medicine.
Andreessen Horowitz’s first step into this general space was in April 2014, when the firm led a $23 million Series B round for Omada Health. The digital therapeutics company created Prevent, a virtual diabetes prevention program that connects those living in the same area who are using diet and exercise to stay healthy.
According to accelerator Rock Health, 2015 is on track to equal 2014’s blockbuster year, when $4 billion poured into technology-focused health companies, or about 8% of all venture funds. By June 1, $2.1 billion had already been poured into health-tech.
The biotech landscape has been abuzz of late with the news of sector darling Theranos, which is aiming to reboot the blood testing market with proprietary technology, running into headwinds in the form of both Food and Drug Administration complaints and a Wall Street Journal investigation that cast doubt on the efficacy of its secretive tech.
Pande says he and his fellow Andreessen partners “generally speaking have empathy for company founders, because it’s simply not easy running and scaling a company with big ambitions. The issues raised (with Theranos) all seem consistent with big company growing pains, and I wouldn’t see it as a reason for staying away from making big (biotech) bets at all.”
That said, he reiterated that his new mission at the firm is to keep his eyes open “for a wide range of companies, and mostly ones that are using software to change the way things are done.”
Follow USA TODAY tech reporter Marco della Cava on Twitter at @marcodellacava.
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