Tobacco Settlement Board Commits Up to $20M for Life Sciences in Pa.

Pennsylvania's Tobacco Settlement Investment Board (TSIB) recently approved a commitment of up to $20 million to Birchmere Ventures III LP to invest in life sciences companies based in Pennsylvania. Birchmere Ventures III, a new fund jointly formed by Pittsburgh-based Birchmere Ventures and San Francisco-based Bay City Capital, will raise up to $150 million.

The commitment to Birchmere Ventures/Bay City Capital will leverage the Tobacco Settlement money three-to-one by raising $30 million from other sources to match an initial $10 million made available by the TSIB. The TSIB stipulated that the total $40 million must close by March 31, 2004.

Birchmere Ventures/Bay City Capital must raise an additional $30 million from other sources to leverage the total available $20 million in TSIB funds. The $30 million must be raised one year from the date of the first close. Following the $20 million TSIB contribution, Birchmere Ventures/Bay City Capital would then be expected to invest a minimum of 70 percent of $80 million, or $56 million, in Pennsylvania life sciences companies, raising another $70 million from other sources to reach the total of $150 million.

Birchmere Ventures III is the TSIB’s third and final $20 million venture fund investment. Quaker BioVentures Inc. was the first firm selected by the TSIB to manage $20 million. PA Early Stage Partners later received TSIB approval to invest another $20 million. All three funds will be invested in Pennsylvania-based life sciences companies.

The TSIB has exclusive control and authority to manage, invest and re-invest money in the Pennsylvania tobacco settlement fund. Pennsylvania will receive the $11 billion settlement over the next 25 years from the national tobacco settlement. The Board consists of state elected officials including Gov. Rendell and individuals appointed by the governor, House and Senate.