Catalio Capital Management raises $381M fund — its largest yet

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Life sciences investment firm Catalio Capital Management has raised nearly $400 million for its next fund, its third and largest venture fund yet.

The company, which launched in 2020 after spinning out from Baltimore-based Camden Partners, raised $381 million to create its Nexus Fund III, Catalio announced Tuesday. That's more than three times the $100 million co-founders George Petrocheilos and R. Jacob Vogelstein raised for the firm's second fund in 2020. The company's first fund in 2016, when it was still part of Camden Partners, raised $15 million.

The new fund began raising money in 2021, attracting more than 250 investors. The oversubscribed fund, with an original goal of $300 million, saw 96% of the investors from the previous fund returning to invest, Petrocheilos told the Baltimore Business Journal.

Catalio will invest in the same amount of companies, 25 to 30, as the previous fund, but will make much larger investments of $5 million to $25 million per company, instead of $1 million to $10 million, Petrocheilos said. The firm now has over $1 billion of assets under management and has invested in 45 companies, according to a press release.

Catalio aims to invest in startups working to develop and commercialize biomedical technologies. The firm invests in companies at a wide array of development stages, from seed funding to companies about to go public.

Catalio previously operated within Baltimore's Camden Partners Holding LLC under the name Nexus Management LP. Along with its headquarters in New York City, the company has offices in Baltimore, located in the Morgan Stanley Buildingin Harbor Point, and London.

Several of Catalio's portfolio companies have been acquired in large deals over the past two years.Thrive Earlier Detection, founded by Johns Hopkins professor Bert Vogelstein, was acquired by Exact Sciences for $2.15 billion in January 2021 while Baltimore-based Personal Genome Diagnostics, was acquired by Labcorp for $500 million in February.

Many of the companies in the Catalio portfolio were founded by Catalio Venture Partners, a group of 36 scientists-entrepreneurs at top academic institutions in the U.S. and Europe. Several of the venture partners have connections to Hopkins, including renowned cancer researcher Bert Vogelstein, who is also Jacob’s father; Barbara Slusher, who is the director of Johns Hopkins Drug Discovery, and Drew Pardoll, the director of the Bloomberg-Kimmel Institute for Cancer Immunotherapy at Johns Hopkins Medicine.

“A lot of scientists and professors at Hopkins are becoming more entrepreneurial,” Petrocheilos said.

The new fund comes at a time when venture funding in Maryland has declined dramatically so far this year compared to 2021. Petrocheilos said 2022 represents a normalization of company valuations, compared to the prices of the past few years.

“Valuations, at least in our sector of life sciences, have become more sensible compared to what they used to be a year and a half or two years ago,” Petrocheilos said.