Third Rock tops STAT’s VC rankings, boosted by early biotech investments

This story is republished from STAT, the health and medicine news site that’s a partner to the Globe. Sign up for STAT’s free Morning Rounds newsletter here.

Third Rock Ventures, the investment firm that has backed biotech startups for nearly two decades, has not only invested in groundbreaking drug companies, but it has generated the best returns on its investments, according to an analysis by STAT.

The analysis was part of STAT’s sixth annual “Ranking Biotech’s Top Venture Capital Firms” report. The report gives an unfettered view into biotech VC firms’ investing successes or shortcomings, sharing financial figures that are rarely seen by the public. The report, which hasn’t been replicated elsewhere, ranks 22 prominent biotech venture firms based on their returns.

Third Rock routinely tripled investors’ money. For every dollar that a pension fund or a university endowment gave Third Rock to invest, the VC firm made a median $3.58 — far more than many other biotech firms. The analysis is based on Third Rock’s first three funds, raised between 2007 and 2013. Only time will tell how the firm’s more recent investments perform.

The firm declined to comment.

Third Rock was founded in 2007 by Millennial Pharmaceuticals veterans Mark Levin, Robert Tepper, and Kevin Starr. The firm has since undergone several generational shifts — Levin and Starr are no longer involved with the daily operations at Third Rock, and other partners have come and gone from the firm. These days, the firm is led by a group including Tepper and Abbie Celniker, Kevin Gillis, Reid Huber, and Jeff Tong.

Third Rock, which has offices in Boston and San Francisco, has financed companies like Blueprint Medicines, MyoKardia, and Thrive Earlier Detection Corp. In June, Sanofi purchased Blueprint — in which Third Rock first invested in 2011 — for $9.1 billion.

The last few years have represented one of the worst markets for biotech startups and investors in recent history. It has hit biotech VC firms hard. Now, they are facing new anxieties — the federal government has cut funding for scientific research, putting the experiments that could lead to the new hit biotech startup in jeopardy.

Biotech’s share of the overall venture capital market has fallen dramatically in recent years, according to PitchBook. In 2012, 19 percent of the money that venture capitalists raised was invested in biotech. But that dropped to just 6 percent in 2024, before falling further to 4 percent in the first quarter of 2025.

Third Rock has greatly scaled its ambitions in recent years. Its first few funds were modest, between $378 million and $516 million. But in 2022, the firm raised $1.1 billion for its largest fund to date.

Many biotech VCs have been trending toward such large fundraises, but there’s debate about whether that’s actually a good thing. Can a venture capitalist realistically turn $1 billion into $3 billion or $4 billion by investing in notoriously failure-prone drug companies?

Some venture capitalists would say the answer is no. Bruce Booth, a partner at VC firm Atlas Venture, has written about why his firm has opted to stick with relatively small fund sizes. “Biotech venture is a game of probabilities. Failure is a constant — of drug programs and companies alike. It’s like gravity, a constant pull downward,” he wrote last year. “The layered probabilities are stacked against larger early stage VC funds being able to deliver 3x+ portfolio multiples.”

Across the funds that STAT analyzed, funds of less than $500 million generated better returns. The median fund in that group roughly doubled its money, while the median mega-fund with more than $1 billion garnered a 1.77x return. The median fund between $500 million and $1 billion in size generated a 1.5x return.