Thursday, March 11, 2004

Venture capital firm starts branch here

By James McNair
The Cincinnati Enquirer

A California venture capital firm has set up shop in Cincinnati with the intention of identifying startup life sciences companies in the Midwest deserving of seed money from a $100 million investment fund.

The Charter Life Sciences fund was launched in September by Charter Venture Capital, a Palo Alto, Calif., firm that has invested more than $325 million in almost 150 early-stage technology and biotech companies since it was founded in 1982.

Dr. Donald Harrison, a biotech entrepreneur who served recently as senior vice president of the University of Cincinnati Medical Center, is one of Charter Life's four managing partners and heads its Cincinnati office. He said the fund will seek out Midwestern companies that might be overlooked by venture capital spotters on the West Coast.

"We know there are a lot of good ideas that don't get funded," Harrison said Wednesday. "When I founded Atricure and UMD, I couldn't find any venture capital firms in Cincinnati or the Midwest who would invest in them, so I had to go to California to get money."

Charter Venture invested $3 million in Atricure, a West Chester company that makes cardiovascular surgical devices, and about $4 million in UMD, a Cincinnati venture in phase II clinical trials for a drug delivery device for women with painful menstruation.

Charter Life Sciences has raised $30 million and is targeting $100 million. The Tri-State Growth Capital Fund, managed by Fort Washington Capital Partners, has committed to participating.

"We believe that the presence of venture capital funds such as Charter Life Sciences is critical to the development of the large pool of life sciences assets in the Midwest," said John O'Connor, director of private equity and investment research at Fort Washington Capital Partners.

Harrison said the fund has not earmarked any of the $30 million but has received about 100 business plans, a fourth of which are from the Midwest. He said due diligence is being done on three Midwestern ventures, including one in Lexington and one in Louisville.

Venture capital firms sank $5.12 billion into 566 life sciences deals in 2003, according to Thomson Financial. The year before, 546 life sciences deals accounted for $5.17 billion.

Harrison said more than 100 people are expected at Charter Life Sciences' open house this afternoon in the Hoxworth Center on the University of Cincinnati Medical Center. The event is scheduled for 4 to 7 p.m. in the Bio/Start incubator.


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