Chicago-Based ARCH Venture Partners Targets $600M For Tenth Deep Tech Fund

Late Friday afternoon, Chicago-based ARCH Venture Partners filed paperwork with the SEC indicating its intent to raise a targeted $600 million for “ARCH Venture Fund X, L.P.”

Follow Crunchbase News on Twitter

At this point, no capital has yet been raised for the new fund, and the capital target is subject to change.

According to Crunchbase data, verified where possible with media reports and prior SEC filings, Fund X would be ARCH’s largest fund to date.

If fully-raised, Fund X would bring ARCH’s total funds raised to $2.86 billion. This doesn’t include any special purpose vehicles, sidecar funds, or other pools of capital raised by ARCH separate from its flagship funds.

Initially founded in 1986, what would eventually become ARCH Venture Partners began as an initiative by the University of Chicago to protect and commercialize intellectual property developed at UChicago and its partnered national labs like Argonne.

However, rather than simply patenting and licensing IP (still the common practice in most university technology transfer offices) the Argonne-Chicago (ARCH) Development Corporation—initially conceived as a non-profit organization owned wholly by UChicago—was tasked with spinning up companies based on these scientific innovations.

Steven Lazarus, the founding general partner at ARCH, recruited a ragtag bunch of graduate students from UChicago’s business school. Bob Nelson, Keith Crandell, and, later, Clint Bybee joined Lazarus and would come to be known as the 57th Street Irregulars (after the business school’s location on 57th Street in Chicago’s Hyde Park neighborhood).1

ARCH Associates raised its first fund in 1988 with $4 million from State Farm and another $5 million from the University and its trustees. In 1992, Lazarus, Nelson, Crandell, and Bybee spun out their venture-building and investment group under a new name: ARCH Venture Partners. And, no longer irregulars, the core team mentioned above became the first general partners at ARCH.

Since then, ARCH has raised progressively larger funds. The firm takes a multi-stage approach to its investment strategy, though it remains an early-stage investor at its foundation. In part, its larger fund sizes enable the firm to invest early and maintain their stakes throughout the venture lifecycle.

So far in 2018, ARCH Venture Partners has enjoyed a number of exits from its portfolio. These deals include:

• Unity Biotechnology, which raised $85 million in its May IPO. ARCH Venture Partners co-led the company’s $35 million Series B round announced in August 2017.
• Hua Medicine, a drug development company based in China, went public in September after raising more than $242 million in known venture funding across four prior rounds. ARCH Venture Partners invested in its Series A round, which was announced in September 2011.
• Homology Medicines, a gene editing and gene therapy company, raised $144 million in an initial public offering in March. ARCH participated in both rounds, Series A and Series B, raised by the company.
• Scholar Rock went public in May and raised $75 million in the offering. ARCH Venture Partners led its $25 million Series A and followed on through two subsequent rounds prior to IPO.
• Integrated Diagnostics helps diagnose complex diseases using non-invasive blood tests. The company was acquired by molecular diagnostics company Biodesix for an undisclosed sum in July. ARCH Venture Partners participated in its Series A round.

Other big life sciences positions include Twist Bioscience, which is expected to go public this week, unless competing firm Agilent’s allegations of misstatements sway the SEC. There’s also cancer diagnostics company Grail, which has raised a whopping $1.6 billion in venture funding to date. ARCH Venture Partners invested in Grail’s $100 million Series A and led its $1.2 billion Series B, which was huge even by life sciences standards.

Although the firm is primarily focused on life sciences these days, ARCH does have offices throughout the U.S. (plus one in Dublin, Ireland), and partners with many research groups outside UChicago, ARCH remains true to its Chicago roots.

In June, the firm announced that co-founding general partner Steven Lazarus had died at the age of 87. Keith Crandell, one of the original 57th Street Irregulars, succeeded him as managing director of the firm.

Illustration: Li-Anne Dias