Proximal Ventures raises debut fund to back startups bringing AI to drug development

While established venture firms continue to attract capital, first-time fund managers are facing one of the toughest fundraising environments in years. But that didn’t stop Sahir Raoof, a former SignalFire investor and executive at two healthcare startups, from raising $27.5 million for his first solo VC fund.

Raoof’s firm, Proximal Ventures, is betting that AI can transform the tools, infrastructure, and services that support drug development.

Pharmaceutical companies have historically outsourced various stages of drug development to specialized service providers, from synthesizing thousands of molecular compounds and figuring 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 told TechCrunch.

Raoof believes AI could automate much of that work, creating an opportunity for startups to capture billions of dollars in pharmaceutical industry spending. By using AI, these companies could deliver the same services at a lower cost and in significantly less time, he said.

Some of the most valuable applications of AI so far have been in service-oriented industries like law and finance, Raoof said. He sees similar opportunities in pharmaceutical services.

Proximal plans to invest in pre-seed and seed-stage startups, writing checks from $500,000 to $1.5 million. The firm has already backed six startups, including 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.

Before spending two years as a principal at SignalFire, Raoof led business development at clinical trial recruitment startup Iterative Health and previously oversaw partnerships at Flatiron Health, an oncology data company acquired by Roche 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,” Raoof said.

His sales chops, deep understanding of the healthcare ecosystem, and extensive industry relationships gave limited partners, the investors in VC funds, the confidence that he could spot strong startups and help them land customers. Proximal’s backers include VC firms SignalFire and Kleiner Perkins, Bertelsmann Healthcare Investments, and individual investors such as Dimension Capital co-founders Nan Li and Zavain Dar.

Amy Abernethy, co-founder of Highlander Health and former principal deputy commissioner of the FDA, is also an investor. She first met Raoof when they 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. Abernethy is convinced that his abilities, along with the understanding of what the healthcare market needs, will make him a successful investor.

It is these qualities that have helped Proximal invest in startups alongside some of the better-known, much larger funds, she added.