Proximal Ventures Raises $27.5 Million Debut Fund for AI in Drug Development

Sahir Raoof has closed a $27.5 million debut venture fund aimed at startups that use artificial intelligence to automate services long outsourced by pharmaceutical companies, according to TechCrunch. The fund, called Proximal Ventures, lands in what TechCrunch describes as one of the toughest fundraising environments in years for first-time fund managers, even as established venture firms keep pulling in capital.

The bet is specific: drug companies have historically paid outside service providers to synthesize molecular compounds, figure out manufacturing at scale, and analyze clinical trial data, rather than buying software to do it themselves. Raoof thinks AI is changing that math.

Who is Sahir Raoof?

Sahir Raoof is a former SignalFire investor who spent two years at the firm as a principal before launching Proximal Ventures. Earlier in his career 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, TechCrunch reported.

"For a long time, the assumption was that pharma is not a great buyer of software, but a really good buyer of services," Raoof told TechCrunch.

What problem is Proximal Ventures trying to solve in pharma?

Raoof's thesis is that AI can automate the service work pharmaceutical companies currently pay outside vendors to perform, letting startups deliver the same output at lower cost and in less time, according to TechCrunch. He pointed to law and finance as industries where AI has already produced some of its most valuable applications and said he expects a similar pattern in pharmaceutical services, which he believes represents billions of dollars in addressable industry spending.

Which startups has the fund backed so far?

Proximal has already invested in seven startups, TechCrunch reported. One is ChronicleBio, co-founded by former OpenAI executive Fidji Simo, which uses AI to analyze biological and medical data to better understand chronic diseases and identify potential treatments.

Fund at a glance

• Fund size: $27.5 million, Proximal Ventures' debut fund
• Check size: $500,000 to $1.5 million, targeting pre-seed and seed-stage startups
• Portfolio so far: seven startups, including ChronicleBio
• Reference deal: Flatiron Health, where Raoof worked, sold to Roche for $1.9 billion in 2018

Who is backing Proximal Ventures?

The fund's limited partners include venture firms SignalFire and Kleiner Perkins, Bertelsmann Healthcare Investments, and individual investors such as Dimension Capital co-founders Nan Li and Zavain Dar, according to TechCrunch. Amy Abernethy, co-founder of Highlander Health and former principal deputy commissioner of the Food and Drug Administration, is also an investor.

Abernethy first met Raoof when the two worked together at Flatiron Health, where she served as chief medical officer. She told TechCrunch that his ability to build relationships and spot industry bottlenecks made a lasting impression, and said she is convinced his skills and understanding of what the healthcare market needs will make him a successful investor.

Raoof said that track record was central to winning over limited partners in a difficult market for new fund managers. "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 told TechCrunch, describing the challenge startups in the sector typically face in landing their first customers.

Why does Raoof's sales background matter to investors?

Before moving into venture capital, Raoof spent his career on the commercial side of healthcare technology, from partnerships at Flatiron Health to business development at Iterative Health. TechCrunch reported that his sales experience, familiarity with the healthcare ecosystem, and existing relationships across the industry gave limited partners confidence that he could both identify promising startups and help them close deals with pharmaceutical customers, a step many early-stage biotech software companies struggle to clear on their own.

What should readers watch for next?

• Whether Proximal deploys the bulk of its $27.5 million across additional pre-seed and seed deals in the next year
• How ChronicleBio and the fund's other six portfolio companies perform in landing pharmaceutical customers
• Whether larger VC firms follow Proximal into AI-for-pharma-services as a distinct investment category
• Whether Raoof's fund attracts a larger follow-on vehicle given backing from SignalFire and Kleiner Perkins

The full TechCrunch report, including additional detail on Proximal's strategy, is available here.