Home Venture Capital Arboretum Ventures to raise $250 million in new fund

Arboretum Ventures to raise $250 million in new fund

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One of the state’s largest venture capital firms has commenced fundraising efforts for its sixth fund.

A regulatory filing this week shows that Arboretum Ventures in Ann Arbor aims to raise $250 million for its Arboretum Ventures VI LP fund. At that size, the fund would be the same size as the firm’s previous round, as Crain’s reported in 2019.

Arboretum co-founder and Managing Partner Tim Peterson declined to comment Friday, citing regulations from the U.S. Securities and Exchange Commission that prohibit investment funds from publicly talking about their fundraising efforts.

With $700 million under management as of 2020, Arboretum — with a primary focus on health care investments — stands as the state’s second-largest venture firm, behind Farmington Hills-based Beringea, according to Crain’s data.

Some of the company’s current, notable investments include two Ann Arbor biotech firms. — Akadeum Life Sciences and Strata Oncology, which last year set a record for largest VC raise by a Michigan bioscience company.

The renewed fundraising efforts by Arboretum comes as venture activity has generally slowed, in line with much of the rest of the economy as inflation and other macro elements create headwinds.

The slowdown, however, comes just after a record year for the venture sector in 2021, when fundraising efforts topped $100 billion for the first time, according to data from Pitchbook. Fundraising notched a year-to-date total of $128.3 billion across 730 funds and representing a 47.5 percent year-over-year increase compared to 2020’s record of $86.9 billion.

Fundraising activity this year has remained quite strong, according to a May Pitchbook report, but the devil appears to be in the details.

“Almost all funds, aside from the top 10 to 20 premier firms, are having a much harder time securing their latest vehicles, in large part because limited partners are overwhelmed by the sheer number of funds seeking capital this year, investors say,” according to the Pitchbook report.

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