Between the pandemic, political unrest, and inflation across the country, venture capital fundraising has become increasingly difficult over the past few years. Even for venture capital firms with incredibly strong track records, things have become uncertain. With new tech, such as AI, revolutionizing industries the world over, things have very much been in flux. One such venture capital firm that has had great success but has fallen upon unprecedentedly difficult times as of late is Foresite Capital.
Foresite Capital is a venture capital firm that has 47 IPOs, 28 M&As, and 58 FDA-approved drugs under its belt, yet the team found it immensely difficult to raise the funds to commence with a sixth fund in which it could viably back more options. Foresite Capital has been in operation as a multi-stage healthcare and life sciences firm for over thirteen years, finding immense financial success and personal satisfaction in all five of its previous funds. But despite all of this, it took over two years to raise proper funding for its Fund VI.
Jim Tananbaum, CEO and founder of Foresite Capital, knew early on that things were only going to get harder moving forward. In Tananbaum’s own words, “Almost all of our LPs in fund five renewed in fund six. They just renewed with 30% less capital.” The resulting loss of capital left Foresite Capital with “a bit of a hole to plug,” as Tananabaum puts it.
Seeing as Foresite Capital’s previous fund, Fund V, totaled over $969 million (made up of a $775 million core fund and a $194 million companion opportunities fund), Tananabaum and his team within the San Francisco-rooted venture capital firm were intent on ensuring that their sixth fund live up to those lofty ambitions as well. In Tananbaum’s view, a sixth fund was not worth doing at all if it was going to wind up being “significantly smaller” than its predecessor.
To help the team reach the required funding and leap over that “30% less capital” gap, Foresite Capital hired Hadi Tabbaa to lead the venture capital firm’s upcoming widespread investment relations efforts. With a history of guiding other companies such as B Capital and Coatue Management to rousing comeback stories, Tabbaa looks to secure new LPs for Foresite Capital from across the globe, primarily targeting international markets such as the Middle East and Asia.
With Tabbaa’s assistance, Foresite Capital was recently able to announce that it wound up closing its sixth fund out with over $900 million. As the venture capital firm heads into unprecedented and uncharted territory moving forward, Tananbaum, Tabbaa, and the company strive to preserve the core ethos of why Foresite Capital began doing what they do in the first place. As Tananabaum said, “Over a decade ago, we named the firm Foresite because we thought we had an idea of where healthcare was headed. We felt that it was going to be a combination of genomics and artificial intelligence that would lead to the ability to distribute care individually.”
