It’s always slightly shocking to find out that a perceived wealthy friend or colleague isn’t so well off. I felt much the same way yesterday about seeing biotech venture firm Oxford Bioscience Partners on PE Hub’s roster of the “VC Walking Dead,” which is a list of more than a dozen venture firms that PE Hub author Dan Primack writes are said to be without capital to invest in new companies.
One day after posting his roster, Primack took Oxford off the list, at least “temporarily.” An attorney for the firm had written in to say Oxford’s latest fund was only two-thirds depleted, and that the firm had just put money into an oil-recovery startup called GloriOil—implying it’s not out of money to make bets on new ventures. (Oxford alerted me that the firm had been taken off the list late this morning, after I had contacted the firm for comment about its initial status on the list.)
But the fact remains, as Primack reports, that Oxford was only able to raise $150 million of the $400 million the firm had targeted for its latest fund (I’ve heard that the goal was actually $300 million). It’s not exactly clear when Oxford closed the fund. Primack says the fund closed after the Red Sox raised a banner. He notes that the firm has used capital from the fund to invest in 13 companies. With commitments to make follow-on investments in those companies, the firm has little left to put toward new additions to its portfolio.
There are several reasons not to be surprised about Oxford’s marginal status. In general, VC firms are having trouble attracting capital from limited partners such as pension funds, endowments, and mutual funds because the falling prices of U.S. securities have restricted the amount those groups invest in “alternative assets” such as venture funds. I had also heard talk that the financial meltdown last fall happened as Oxford was out on the road raising money. Last month Oxford general partner Michael Lytton left the firm to become senior vice president of business development at Cambridge, MA-based Biogen Idec (NASDAQ:[[ticker:BIIB]])—but by all accounts Lytton’s switch from venture investing to big biotech had nothing to do with Oxford’s financial health.
Still, there are some unexpected aspects to Oxford’s reported troubles. For one, Oxford general partner Doug Fambrough was the top-rated venture capitalist in New England on Forbes’ Midas List of top VCs released earlier this year. Yet as Bob wrote in February, New England VCs did not make a great showing on the list, and Fambrough was first among his regional peers with an overall No. 22 ranking in the country. Oxford has also piled up some successful exits in recent years with the sale of such portfolio companies as San Francisco-based biotech firm Sirna Therapeutics, which Whitehouse Station, NJ-based drug giant Merck (NYSE:[[ticker:MRK]]) bought for a whopping $1.1 billion. In summer 2007, I wrote this column for Mass High Tech about some of the wins that Oxford had quietly accumulated.
To be clear, Oxford’s financial fix is not unique in the venture world. Though Oxford appears to be the only firm based in New England to be considered for Primack’s list, there are certainly—and unfortunately—numerous firms in the region that lack the capital to pump into new companies.
