Since The W Fund launched more than four years ago in Seattle, it has invested $20 million across 17 early-stage companies that spun out of the University of Washington and other research institutions across the state.
Now, as the venture capital firm wraps up new investments from its first fund, what’s next?
Linden Rhoads, the former vice provost at the UW who originally helped launch The W Fund and still manages the firm on a volunteer basis, said the fund has one new investment in process and at least one other to make.
But, she said, “it is almost certainly the case that most of our new initial investing activity of the initial raise is finished.”
It will continue to make follow-on investments for the next several years, continuing the path of 2016 when The W Fund made ten follow-on investments in existing portfolio companies.
Rhoads also said there are “very serious conversations underway about a successor fund,” and one that would most likely be focused on the broader life sciences industry — this includes startups developing technology for industries ranging from healthcare IT to computational software to medical devices.
That’s because 14 of the fund’s 17 portfolio companies can be categorized as part of the “broader life sciences” industry. They range from C SATS, an online tool for reviewing medical procedure techniques, to Vicis, the football helmet manufacturer that had The W Fund lead its first round of investment.
“The W Fund ended up being somewhat of a de-facto life sciences fund,” Rhoads said.
Rhoads said it is important for early-stage life sciences companies in Washington to have access to capital, particularly given that The Life Sciences Discovery Fund is being phased out.
The W Fund is fueled by private industry, leading venture capital firms and federal stimulus funds. When it launched four years ago, then UW president Michael Young said it would “serve as a catalyst to help the university fulfill its broader missions and create even greater opportunities for the State of Washington.”
The W Fund has yet to have a portfolio startup announce an exit, but Rhoads said “there are leading indicators that have us very excited about the prospects of the fund doing well.” She noted that the 17 startups have gone on to collectively raise more than $80 million in non-W Fund capital.
“I think it’s true that we provided a lot of benefit to these companies,” Rhoads said.
A five-member board — consisting of Rhoads; Madrona Venture Group’s Troy Cichos; Washington State University’s John Gardner; startup attorney Joe Wallin; Unitus Seed Fund Managing Director Will Poole; and former UW vice provost Paul Jenny — manages the fund. There is also a 22-person investment committee that helps advise the organization.
Vikram Jandhyala, vice president for innovation strategy at the UW who replaced Rhoads when she stepped down in 2014, told GeekWire that “a number of UW startups benefitted” from The W Fund.
“As The W Fund is coming closer to the end of making new investments, we reflect on the critical importance of early-stage investment in the local innovation ecosystem,” he said. “As we look to the future of our region, we believe multiple types of early-stage funding vehicles will continue to play a role and be a value-add for UW’s startups and technologies. This region is prime for additional start-up capital and the UW looks forward to continuing to be a key player in the innovation ecosystem.”
Under Rhoads’ leadership at the UW, the number of startup companies formed with technologies from the university increased, as did the number of patent filings.
That has continued with Jandhyala, who has helped expand the UW’s CoMotion innovation program, formerly known as the Center for Commercialization (C4C). The organization has established “CoMotion Labs,” which includes a virtual reality incubator called CoMotion Labs HQ; a healthcare and biotech incubator called CoMotion Incubator at Fluke Hall; and Startup Hall, which houses co-working space geared to software and IT startups and is also home to the Founder’s Co-op venture capital firm and Techstars Seattle.