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$20M in tobacco funds will boost life sciences
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Birchmere Ventures and Bay City Capital will pool the tobacco fund money in a new fund totalling between $150 million and $200 million that will target both life sciences and information technology companies both inside and outside the region.
Birchmere partner Chuck Dietrick said Monday that 70 percent of the tobacco money portion of the fund will be required to be invested in Pennsylvania life science start-ups.
Birchmere's first fund, totalling $77 million, includes three local life science investments, including Renal Solutions Inc., Precision Therapeutics Inc. and Tissueinformatics Inc.
Dietrick said the first investment from the new fund could be made as early as March.
Bay City has raised $500 million to date. As part of the new deal, two of Bay City's investment managers will move into Birchmere's North Side offices.
"This region is dramatically underserved as far as venture capital availability," Dietrick said, adding that Pennsylvania's portion of nationwide venture capital investment has slid from 7 percent in 1997, down to 2 percent last year.
But he said the region presents a good opportunity for investment because of the significant funding for research from organizations like the National Science Foundation and the National Institutes of Health.
"We have a tremendous amount of intellectual property that hasn't had the venture capital to take it to the market," he said.
Two other groups, Quaker Bioventures of Philadelphia and PA Early Stage of Wayne, each already have received $20 million from the tobacco fund. Both have established satellite offices at the Pittsburgh Life Sciences Greenhouse in the Cellomics Building along Second Avenue in Hazelwood.
Saturn Capital of Boston, which had operated a Pittsburgh office, also had been in the running to manage the state's Western Pennsylvania life sciences investment, but apparently dropped out of the bidding. Officials from Saturn could not be reached for comment.
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