Formation Bio, a venture-backed biotech company, has raised its own investment fund, according to the WSJ.
The move reverses the usual order of things in biotech financing. Venture-backed companies normally take money from outside investors rather than setting up a vehicle to deploy capital of their own. Formation Bio’s decision to raise a fund rather than simply raise another funding round marks an unusual structure for a company that develops pharmaceutical and biological products, and it is likely to draw attention from other founders and backers watching the wider investment picture in life sciences.
Key facts
- Formation Bio is a venture-backed biotech company.
- The company has raised its own investment fund.
- The story was first reported by the Wall Street Journal.
What makes this unusual
Investment funds typically pull in capital from outside backers and then place it into portfolio companies. Formation Bio is instead the operating company itself standing up a fund, a structure that departs from how biotech firms conventionally raise money.
Why biotech funding usually works differently
Biotech companies focused on drug and biological product development have historically relied on venture capital firms and other external investors for financing rounds, rather than originating investment vehicles of their own.
