Running on Two-Year Cycle, Avalon Ventures Lands $200M for Tenth Fund

Healthy venture firms typically raise new funds every three to four years, but Avalon Ventures, which is based in San Diego and Cambridge, MA, appears to be operating closer to a two-year cycle.

The venture firm, which invests early in both life sciences and Web technology startups, has secured $201.6 million for its tenth fund, according to a recent regulatory filing. The notice that Avalon submitted to regulators comes less than two years after Avalon raised the biggest chunk of its ninth fund. Avalon closed on its eighth fund in early 2008.

One factor affecting the faster pace is that Avalon, founded some 30 years ago by life sciences investor Kevin Kinsella, has traditionally operated as a boutique firm that raised smaller funds. Of course, the firm’s success with early investments in Zynga (NASDAQ: [[ticker:ZNGA]]), Illumina (NASDAQ: [[ticker:ILMN]]), and Aurora Biosciences (now part of Vertex Pharmaceuticals (NASDAQ: [[ticker:VRTX]])) has been attracting more interest from college endowments, pension funds, and other institutional investors. Kinsella told me a couple years ago that he had initially planned to raise $150 million for the previous fund, but a stronger-than-expected response from limited partners pushed Avalon IX to $200 million.

That was Kinsella’s biggest fund at the time, but the firm now plans to raise at least $250 million for Avalon X, according to its recent filing.

Amid an overall contraction in the U.S. venture capital industry, another explanation for Avalon’s fast fund cycle is a proliferation of targets. Investments from Avalon’s ninth fund include MOGL, Awarepoint, RQx Pharmaceuticals, and Sova Pharmaceuticals in the San Diego region, and Nanigans, Cloudant, Kinvey, Pingup, and Backupify in the greater Boston area.

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.