Polaris Venture Partners raises $233M of $400M fund

Life sciences and IT investment firm Polaris Venture Partners has raised $233 million of an anticipated $400 million fund, according to a filing with the Securities and Exchange Commission.

The $400 million goal appears to represent scaled-down expectations for the venture luminary, which had previously targeted $500 million for its sixth fund, VentureWire reported. Polaris’ fifth fund closed at $1 billion in 2006.

Polaris’ portfolio companies include PartsSource Inc., an Aurora, Ohio-based supplier of replacement parts for hospital equipment, and Apnex Medical Inc., a St. Paul, Minn.-based sleep-apnea device firm. Other portfolio companies include Ironwood Pharmaceuticals, BridgePoint Medical and Asthmatx.

Polaris’ $50 million investment in PartsSource in 2008 represented the year’s largest funding of any healthcare firm in Northeast Ohio.

Polaris’ smaller-than-anticipated fundraise may be a signal that smaller, targeted funds are the way forward for the struggling venture capital industry. Ten-year venture capital returns have fallen in recent years, as the once-lucrative IPO market has slowed and technology startups no longer need as much capital as they once did to get rolling. That’s led to much hand-wringing in recent years about the venture model being “broken.” Polaris’ latest fund could be a sign that the critics were right.