Formation Bio Raises $600 Million Fund to Accelerate AI-Driven Drug Development

Formation Bio, a biotech startup backed by Andreessen Horowitz, Sequoia Capital and Thrive Capital, has raised a $600 million "drug development accelerator" fund aimed at addressing the bottleneck between AI drug discovery and clinical development. The fund will operate akin to a venture vehicle, with Formation serving as general partner, including carried interest, and limited partners consisting mostly of university endowments, foundations and hospitals. Each acquired molecule or drug program will become its own NewCo, with early successes slated for sale to large pharmaceutical companies. CEO Ben Liu said the structure lets Formation "take more shots on goal" without diluting existing shareholders through additional equity raises, adding the company has no plans for another venture round. Formation, valued at $1.7 billion in its last 2024 funding, believes AI and centralization can cut clinical research costs by 30% to 50%, targeting CRO margins that Liu said carry "perverse incentives."