New Fund Aims Venture Capital At Emerging Public Health Risks

Venture capitalist John Doerr said the fund will help health innovators. (Pat West - San Jose Mercury News)

Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm with a 30-year reputation for seeing the next new thing, said yesterday that it had raised a $200 million fund to invest in companies battling the next new virus.

The money is part of Kleiner's latest round of fundraising, in which it raised a total of $800 million in two funds. In addition to the $200 million KPCB Pandemic and Bio Defense Fund, Kleiner raised $600 million for its 12th general venture fund, $100 million of which will be invested in clean energy technologies.

Kleiner has provided early financial backing to some of the best-known technology and biotech firms in the world, including Google Inc., Genentech Inc., Sun Microsystems Inc. and Amazon.com Inc.

Kleiner partner John Doerr said the pandemic fund is the second highly focused venture fund the Menlo Park, Calif., firm has raised. In 1997, Kleiner raised a dedicated fund to invest solely in Java software development.

"The pandemic fund is to call attention to innovators who are needed to fight emerging health threats," he said. "It's clear there's a real need."

How much money can be made developing new technologies to fight emerging biological threats, such as bird flu, is still an open question, however. Most of the big money in biotechnology historically has been in drugs to treat chronic conditions affecting large populations, such as the cholesterol-reducing drug Lipitor. Much of the funding for battling emerging biological threats, at least initially, will come from the U.S. government and public health organizations around the world.

President Bush recently announced plans to spend $7.1 billion on bird-flu preparedness, with $3.6 billion more to develop vaccines.

Beth Seidenberg, a former National Institutes of Health scientist and former chief medical officer at the biotechnology firm Amgen, joined Kleiner as a partner in May to lead the effort. "There is an innovation gap that exists in multiple areas of emerging infections," Seidenberg said. She said Kleiner will focus its efforts wherever companies are developing new science in the niche, including the Washington area.

Kleiner's other fund, targeting clean energy, is the latest big-dollar commitment to the field since oil prices began rising three years ago. Reston firm New Enterprise Associates, the largest venture capital firm in the world, and VantagePoint Venture Partners, a California firm, have directed hundreds of millions of dollars to clean energy technologies, from better energy storage devices to solar, wind and fossil-fuel alternatives.