Investors in information technology and biotech have diverged, not converged, Andreessen argues. "They've never been less comfortable with software and bio together, and we have a generation of founders who can combine the two."
Andreessen and his venture firm Andreessen Horowitz are now looking to change that. The firm announced Wednesday that it has launched a new $200 million fund to invest in software in biology and medicine, led by its ninth general partner, Vijay Pande.
An expert on using computing for disease research and microbiology, Pande joins from Stanford University, where he was the chair of its chemistry department. Pande had spent a year starting in 2014 as a professor in residence at Andreessen Horowitz working with its team on science startups before joining full-time.
Pande says that Moore's Law (that the number of transistors on a circuit can double every two years) and innovations in computing have made advanced processing affordable enough that it can be applied to scientific problems that would've been prohibitively power and data-draining in the past. Now, he says, "It’s time for scientists to start putting all these pieces together and there’s an opportunity to do that through software."
The new fund isn't investing directly in traditional biotech, both Pande and Andreessen say. Instead it's focused on software companies built to enable and address biotech ideas. "I want to stress that," says Pande. "These companies have the same risks as software companies, and with seed funding, we should get them to a product." Pande plans to make about one Series A investment and 2-3 seed investments each quarter, on pace with other general partners at Andreessen Horowitz. One example of the kind of startup Pande will look for is Omada Health, a digital health company in which the firm led a $23 million Series B in 2014.
Why now for the fund? Pande says that just in the past one to two years, the commoditization of cost in machine learning and computing has led to major advances. "We are on one of those hockey sticks," he says. He believes his fund will have a head start on the competition, but not for long. Excitement for software in bio is industry-wide, he argues, from startups to Google, which restructured as Alphabet in a move Pande believes will open up more opportunities for its bio units. Andreessen says the fund will work closely with Y Combinator as the startup hub spots and grows more companies in the space as well. The fund wouldn't have come together without Pande's involvement, Andreessen admits: "We had no plan B."
"The nature of the ideas is getting really interesting," Andreessen says. "Digital therapeutics, the data that can be gathered through health and physiology with smart trackers, computational pharmacology, machine learning with drugs. The real world potential is very profound. So it's exciting to go deep into these companies now."
