New $27.5M fund will back startups using AI to speed up drug development

A new venture fund called Proximal Ventures has raised $27.5 million to back startups that use artificial intelligence in drug development. It is the first solo fund from Sahir Raoof, a former investor at SignalFire. The bet is that AI can do some of the costly outside work drug companies pay for today, and do it for less.

What the fund is betting on

Drug makers often hand parts of their work to specialized outside firms. That includes making thousands of molecular compounds, working out how to produce a drug at large scale, and analyzing clinical trial data. Raoof says AI could automate much of this. In his words, pharma has not been a great buyer of software, but it is a really good buyer of services.

If AI can deliver the same services at lower cost and in much less time, Raoof sees room for startups to capture billions of dollars in drug industry spending. He points to law and finance, where some of AI's most valuable uses so far have been in service work.

The money and the early bets

Proximal will invest at the pre-seed and seed stages, which means very young companies. First checks will run from $500,000 to $1.5 million. The firm has already backed seven startups.

One is ChronicleBio, co-founded by Fidji Simo, a former OpenAI executive. It uses AI to study biological and medical data to better understand chronic diseases and find possible treatments.

Who is behind it

Raoof spent two years as a principal at SignalFire. Before that he led business development at Iterative Health, which helps recruit patients for clinical trials. He also oversaw partnerships at Flatiron Health, an oncology data company that Roche bought for $1.9 billion in 2018.

• Backers include SignalFire, Kleiner Perkins and Bertelsmann Healthcare Investments.
• Individual investors include Nan Li and Zavain Dar of Dimension Capital.
• Amy Abernethy, a former FDA official who worked with Raoof at Flatiron, is also an investor.

What is not known yet

The raise stands out because first-time fund managers are facing one of the toughest fundraising climates in years. But a fund is a plan, not a result. The article does not name the other six startups or say whether any of these AI services are working for drug makers. It also gives no timeline. If the approach pans out, drug development could get cheaper and faster, which may eventually help new treatments reach patients sooner.