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VC Fundraising

Arch Venture Partners targets $3B Fund XIII in most ambitious raise to date

Chicago-based Arch Venture Partners has set ambitious sights for 2024, sending a bullish signal for life sciences and biotech fundraising.

Arch Venture Partners, with a nearly 40-year record of backing life science and biotech startups, is looking to raise $3 billion for its 13th and largest fund to date, according to a regulatory filing.

Arch’s previous fund, which closed in June 2022 with just shy of $3 billion, was dedicated to investing in early-stage biotech companies.

Chicago-based Arch didn’t respond to a request for comment.

The firm appears confident that it can raise LP capital in what has been a historically depressed fundraising environment. But the small step-up relative to its predecessor fund is more evidence that VCs are pumping the brakes after years of rapid asset growth.

The tougher fundraising environment may be giving name-brand firms like Arch Venture Partners an edge. Many LPs have pulled back from investing in first-time funds and directed dollars toward firms perceived as safe bets.

In October, healthcare investor OrbiMed closed on more than $4 billion in fresh commitments across three funds, including two venture vehicles.

Founded in 1986, Arch has made a number of successful early bets on biotech companies, including Karuna Therapeutics. Arch backed the company’s Series A at a $126 million post-money valuation in 2018; Bristol Myers Squibb agreed to buy the biopharmaceutical company for $14 billion in December.

Arch also joined a Series A round for Rodeo Therapeutics at a $14.75 million post-money valuation in 2017. Rodeo was acquired less than four years later by Amgen for $721 million.

Arch’s funds have typically ranked in the top quartile for VC funds, according to PitchBook data. As of June, the firm’s 2007 Fund VII had recorded an IRR of 37.85% and its 2020 Fund X notched an IRR of 26.46%, according to the annual report by the University of Texas Investment Management Company, one of its LPs.

Featured image by Anchalee Phanmaha/Getty Images

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