Flagship Pioneering, the venture capital fund that launched Moderna, plans a series of new biotechnology companies that will use generative artificial intelligence for drug discovery. This follows the securing of $3.6 billion in funding from its financial backers.

As part of the recent capital raising, the venture fund raised $2.6 billion for its eighth fund and $1 billion for parallel funds that will invest in specific sectors such as certain diagnostics or therapeutics. Flagship is expected to raise additional money for its eighth fund later this year to reach the $3 billion target for the investment vehicle.

A large part of the investments from Flagship's eighth fund will focus on platforms that use AI in novel ways for drug development, said Noubar Afeyan, who founded Flagship in 2000. "Each of the capital pools we raise supports about 25 companies; I wouldn't be surprised if the majority of the [companies in the eighth fund] wouldn't be feasible without AI," Afeyan said.

Among the ideas developed by Flagship are the use of AI to generate new chemical materials that serve as building blocks for drugs, as well as the automation of hypothesis generation for scientists. "AI is a prosthesis for your imagination – your ability to make dramatic leaps changes significantly with these tools," said Afeyan. The money from Flagship's eighth fund will be spent over the next three years.

Flagship, which has 40 companies in its portfolio, not only funds biotech startups but also internally develops the ideas for them and builds them from the ground up before bringing in external investors.

Flagship's recent fundraising completion is a positive signal for venture investments in biotech looking to recover from a downturn caused by the end of the pandemic boom and a series of interest rate hikes.

Arch Venture Partners, another leading biotech investor, began raising a $3 billion fund earlier this year. Flagship closed its latest fund, which raised a record $3.4 billion during the pandemic in June 2021.

Flagship, based in Cambridge, Massachusetts, manages a total of $14 billion in assets, making it one of the world's largest specialized biotech investors. The VC fund has already made significant investments in AI, including Generate Biomedicines, which completed the largest funding round for a biotech last year.

The investment strategy of Flagship typically focused on the founding of platform companies aiming to revolutionize a field of medicine, such as Moderna's mRNA platform, which produced the blockbuster COVID vaccine. However, Afeyan explained that the VC fund is increasingly investing in biotechs that focus on the development of individual drugs.

At least a quarter of the investments from the last fund were provided by Flagship's Pioneering Medicines arm, which collaborates with pharmaceutical companies like Novo Nordisk and Pfizer in developing drugs. "We have absolutely responded to the [criticism]: 'Don't platforms last long, and even if they bring a big return, doesn't it take six, seven, eight years?'" said Afeyan. "The answer is that we now have a dozen programs and will probably have two dozen single-asset programs over the next year and a half.