When RiverVest Venture Partners opened its doors in 2000, hopes were high that it would be an important funding source for St. Louis’ nascent biotechnology industry.

RiverVest went on to be a highly successful venture capital firm, managing $290 million and demonstrating a knack for identifying health care startups that would later go public or be acquired by larger companies.

Of RiverVest’s 34 investments, however, only a handful have been within a few miles of its Clayton headquarters. The firm’s partners monitored startup activity here but rarely found a fit. Firms in St. Louis were too early-stage, and the support system wasn’t as developed as in places like San Diego and Minneapolis, where RiverVest had some of its biggest success stories.

That is changing. This week, RiverVest announced that it has raised $15 million for a fund that will focus mostly on St. Louis. Its Archer Seed Fund plans to invest in drug startups that come out of Washington University, St. Louis University and other area institutions.

Karen Gheesling Mullis, a former Pfizer executive, will run the new fund from an office at BioGenerator, where she’ll be near lab space shared by 50 startups. That’s the kind of critical mass that didn’t exist in St. Louis when RiverVest was founded.

“There’s abundance of skilled talent here, and that human capital is the bedrock we are going to build Archer on,” Mullis said Thursday.

John McKearn, a RiverVest managing director, came to St. Louis in 1979 as a postdoctoral researcher at Washington University. He had a long career in corporate research, ending at Pfizer, before going into venture capital a decade ago.

He’s been impressed by the development of the Cortex district, the emergence of other seed investors and the volume of innovation coming out of area universities. “What’s here today as opposed to even 10 years ago is a very different ecosystem,” McKearn said. “There’s more talent here, and the realization of what it takes to start companies and take them to the next level is more advanced.”

He said RiverVest’s best results have come when it invested early and guided a company’s strategy from the start. He sees an opportunity for the Archer fund to do that with about 10 early-stage firms.

When they need more money, RiverVest can bring in other investors, as it did this year in an $86 million funding round for Tioma Therapeutics. The cancer-drug startup moved its headquarters to California, but its research operations remain in St. Louis.

Source: St. Louis venture fund makes $15 million bet on its hometown | David Nicklaus | stltoday.com