May 1, 2014

VentureWire

Lightstone Ventures Launches With $172M for Early-Stage Health Deals

After two years of operating in stealth mode, Lightstone Ventures , an early-stage life sciences firm launched by health-care investors from Morgenthaler and Advanced Technology Ventures , says it has closed its inaugural fund at $172 million and has already backed three startups. 

Mike Carusi, a Lightstone general partner and a managing director at Advanced Technology Ventures , said Lightstone is operating from the Palo Alto, Calif., offices of ATV.

ATV, he said, will not be raising a new fund.

Mr. Carusi and Jean George of ATV and Hank Plain and Chris Christofferson of Morgenthaler decided to launch the new firm because all four investors feel that raising specialized funds has become a crucial tool in venture investing - especially in health care.

"Venture capitalists used to be generalists," Mr. Carusi said. "But the whole trend today is toward specialization. Building a business today takes more expertise. The technology has become more sophisticated, and the synergies between [one area of technology and another] are less and less.

"In health care, you have to become very specialized. You need to know about insurance reimbursement, the FDA … As an investor, you want to be able to lean on your whole team," he said.

Lightstone's first three investments illustrate that concept, as all three companies have some link to health-care investors at either ATV or Morgenthaler, Mr. Carusi said. 

In announcing a deal that was previously undisclosed, Mr. Carusi said that Lightstone invested alongside New Enterprise Associates and Aisling Capital in Redwood City, Calif.-based EarLens Corp ., which recently raised a $40 million Series B round.

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