Proximal Ventures Raises $27.5M Debut Fund for AI Drug Startups

Why services, not software

Pharmaceutical companies have long outsourced stages of drug development to specialized providers. These range from synthesizing thousands of molecular compounds and working out how to manufacture drugs at scale to analyzing clinical trial data. "For a long time, the assumption was that pharma is not a great buyer of software, but a really good buyer of services," Raoof said.

He believes AI can automate much of that work, letting startups deliver the same services at lower cost and in far less time, and capture billions of dollars in pharma spending. Raoof points to law and finance, where some of the most valuable AI applications have appeared in service-oriented industries, as a model.

Portfolio and backers

Proximal invests at pre-seed and seed stage, with checks of $500,000 to $1.5 million. It has already backed seven startups, including ChronicleBio, co-founded by former OpenAI executive Fidji Simo, which applies AI to biological and medical data to understand chronic diseases and identify potential treatments.

Raoof spent two years as a principal at SignalFire. Before that he led business development at clinical trial recruitment startup Iterative Health and oversaw partnerships at Flatiron Health, the oncology data company Roche acquired for $1.9 billion in 2018. "If you're building a company that's selling into the life sciences, one of the hardest things to do is starting that initial commercial flywheel," he said.

That sales background and his industry relationships reassured limited partners. Backers include SignalFire, Kleiner Perkins, Bertelsmann Healthcare Investments and individuals such as Dimension Capital co-founders Nan Li and Zavain Dar. Amy Abernethy, co-founder of Highlander Health and a former principal deputy commissioner of the FDA, also invested; she worked with Raoof at Flatiron Health as chief medical officer. She says his ability to build relationships and spot industry bottlenecks has helped Proximal invest alongside better-known, much larger funds.