Article preview from Start-Up - November, 2012
It’s been “a little shy” for a while, but the world’s richest charitable foundation has begun making equity investments in early-stage biotech companies that have promising technology for global health.
Article preview from Start-Up - November, 2012
When he ruled the software world, Bill Gates was one of the world’s most aggressive capitalists and was often criticized for not being more charitable. Those days are long gone. Much of his wealth for years has funneled into public health, development, and education projects around the world through the Bill & Melinda Gates Foundation and its $36 billion endowment. But only recently has the foundation begun using the financial tools of capitalism to extend its reach, especially in the biotech world.
Since March 2011, the foundation has made five equity investments in for-profit companies. Four of the five investments have been in venture-stage biotech firms – Visterra Inc., Genocea Biosciences Inc., Atreca Inc., and Liquidia Technologies Inc. – all working on technology related to infectious disease and vaccines. The public health group has focused on technologies related to passive immunity, non-injectable vaccines, and immunomodulatory nanoparticles. These investments are part of an initiative that now has $1 billion at its disposal to purchase equity or deploy via other financial vehicles. “If there’s a platform technology with a bunch of applications and if we can be an owner, our ability to influence the application of that technology is really important,” says Julie Sunderland, who manages the Gates initiative, known as program-related investments, or PRI.
The investment money may pale in comparison to the $25 billion the foundation has pledged in grants since its inception. But as the ranks of high-risk, early-stage biotech VCs diminish, the Gates funds could be crucial in bringing cutting-edge technologies and treatments to clinic and eventually to market, both in the West and in developing countries. “The platform technology might have other applications that can make money for VCs or even build value within the disease we’re excited about,” says Sunderland, “but our investment philosophy is driven by ultimately bringing low-cost health products to the poor.”
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