Merck to invest in Canadian VC fund

It takes money to make money and yet another pharmaceutical maker is partnering in a venture capital fund, this one designed to draw drug companies to Quebec.

Merck Canada is committing to a $100 million Canadian dollars ($99.7 million) fund with Lumira Capital and others with the purpose of drawing more pharmaceutical companies to Quebec, says the Winnipeg Free Press. Merck Canada is the Montreal-based subsidiary of U.S.-based Merck ($MRK), which in September said it planned to pump $250 million into various wells of funding sources for young companies. 

The disclosure comes a day after GlaxoSmithKline ($GSK) and Johnson & Johnson ($JNJ) announced they were kicking in $50 million each to create a fund with Index Ventures to invest in early-stage biotechnology companies.

Index Ventures will contribute $100 million and will make the investment decisions. Of course, GSK and J&J intend to have their say. Moncef Slaoui, head of research and development at London-based GSK, and Paul Stoffels, J&J's chairman of pharmaceuticals, will each sit on the advisory board.

The funds give the big companies an early look into what the cutting-edge researchers are working on since many of them have cut research and development budgets.

"We need to strategically identify the other great ideas that exist anywhere," Slaoui told Bloomberg before announcing the fund. He pointed out that only about 0.01% of science is happening inside their own labs.

The new fund will invest only in early-stage, single-asset companies, which is Index Ventures' strategy. It will focus on companies in Europe but also consider startups in the U.S. and Israel.

The new fund in Canada is expected to be announced officially next week. Economic development officials say they will be there for the news but that the government has yet to pledge any money to the fund.

- here's the Winnipeg Free Press story
- get Bloomberg's take on the J&J/GSK deal

Related Articles:
GSK, J&J back Index's new $200M fund for early-stage deals
Merck jumps in the biotech VC game with $250M plan