Conejo Venture Fund Seeks Life Science Startups

With experienced research executives in place and plenty of capital to invest, Westlake Village BioPartners has started the hunt for local startups. Westlake Bio first announced its $320 million venture capital fund in September, with a special focus on life sciences and biotech companies. The fund, located at 3075 Townsgate Road in Westlake Village, is spearheaded by former Amgen Inc. executive Dr. Beth Seidenberg, who is also a general partner at Menlo Park venture capital firm Kleiner Perkins. Dr. Sean Harper, formerly executive vice president of research and development at Amgen, joined the firm in January. Scott Ryles, chief operating officer at Kleiner Perkins, is Westlake Bio’s chief operating officer. “The beauty of America is our entrepreneurial spirit and innovative streak in general, across a lot of industries. We saw a special opportunity in the L.A. area, where there are large companies like Amgen or Allergan that have employed a lot of people, but there was a limited startup ecosystem and environment,” Seidenberg told the Business Journal. “There’s an unmet, untapped market from the academic centers who have been funding and putting out quite a bit of research,” she continued. “And then there’s a pent-up demand for talent that wants to try their hand at startup companies, and who are really interested in building companies.” Local impact “A VC fund of that size, and certainly with the caliber, industry expertise and reputation of Beth Seidenberg and Sean Harper, it catches peoples’ attention,” said Brent Reinke, partner at the Westlake Village office of law firm Musick Peeler & Garrett, who specializes in startup funding. Reinke also founded BioScience Alliance, a nonprofit focused on facilitating life sciences development in the Conejo Valley. “You have the funds located here, and the likelihood that some of the companies that they’re going to invest in, the management teams they’re investing in, will be physically present here,” Reinke said. “Obviously if they’re successful, they’re going to grow, increase their employee count, and hopefully, eventually have a strong economic benefit to the region.” Harper said he hopes Westlake Bio can fill a gap in the local biotech industry. What was missing before, according to Harper, was the connection between venture capital and building small companies, often based on discoveries in university labs. “That piece was just completely bereft in this part of California. It was such a compelling idea to fill that gap and try to bring the rest of these pieces together in our small part of catalyzing that,” he explained. The firm is investing in more early-stage startups at the moment, and in biotech specifically, but won’t rule out later-stage companies going forward. “We’ve got quite a few companies in our portfolio already,” said Seidenberg. “I can tell you that there will be several, hopefully many over time, that will be in the L.A. area. We do have quite a number that are in the Bay area as well. We are building new research facilities in the Ventura County area, and we expect to do more and more of that.” The fund plans to announce its portfolio companies, one at a time, within six to nine months. Life science trend Westlake Bio is a local manifestation of a national trend toward life science VC investment. The 2018 fourth quarter Venture Monitor, produced by PitchBook and the National Venture Capital Association, has data that supports considerable growth for life science and biotech companies the past couple years. On a national level, capital invested in life science companies reached a “decade high” in 2018, with $44.5 billion in funding, accounting for 33.9 percent of total venture capital investment last year. The upswing began several quarters earlier, the report said, but there has recently been a high concentration of life science opportunities attracting the “lion’s share of investment.” Jeff Grabow, U.S. Venture Capital Leader at accounting firm Ernst & Young in San Francisco, said VC firms scrutinize the biotech sector. “Venture capitalists raised $55 billion as an industry last year to invest money into venture funds; that’s a record, that’s an all-time high,” he said. “That’s going to be invested in the next 10 years. You can’t put all that money to work in Silicon Valley and Boston and make money. There’s not enough oxygen – you will not be successful.” Historically, Conejo Valley suffered because of distance from the traditional VC centers of Boston, Silicon Valley and New York City. But geographical barriers aren’t as important now, Grabow argued, when it comes to making good investments. “The world is becoming flatter in terms of distribution of capital and access to capital,” he explained. From 2008 to 2018, VC deal counts not only increased, but deal value as well, with $50 million-plus life science investment making up 61.4 percent of capital invested in 2018, compared to roughly 15 percent in 2008, according to Venture Monitor. What’s next? For now, Westlake Bio will focus on building great companies, Seidenberg said. Once the groundwork is laid, the company plans to cultivate startups in the immediate Los Angeles area. “If you look at what’s necessary for that kind of explosive growth (in biotech), there are certain ingredients necessary, and clearly you have to have great academic institutions, medical centers – we have that in this part of California,” added Harper. Encouraged by the success of novel therapies with DNA – including Kite Pharma, a Santa Monica company that makes genetically engineered T-cells, and Atara Biotherapeutics Inc., which has T-cell research and manufacturing operations in the Conejo Valley – Seidenberg and Harper are considering new technology in drug manufacturing and medical treatments as well as new drugs. “We used to think it’s either a pill made of chemical matter or it’s a protein that gets injected,” said Seidenberg. “We’re trying to get on the leading edge of the innovation curve. I think Sean and I would be really proud if five years from now, people are in L.A. and it’s booming (from) collective efforts to make that happen.”