Generative AI biotech Cradle has raised a $73m Series B led by Silicon Valley VC IVP — which has previously backed tech giants Uber and Netflix, alongside unicorn AI startup Perplexity — and existing investors Index Ventures and Kindred Capital. The round comes a year on from its $23m Series A.
Cradle is building software that looks to make developing new drugs, chemicals and agricultural products like pesticides faster and cheaper by using generative AI to help design protein sequences.
It’s part of a growing wave of startups selling AI-powered SaaS products for molecule discovery, rather than trying to develop the molecules — which can cost huge sums of capital and take years to generate revenue — themselves.
The fresh injection of capital comes on the back of a year of significant commercial growth for Cradle, which says it has seen a 15x increase in the number of projects (a single molecule Cradle’s SaaS platform is being used to develop counts as one project) paying to use its platform.
A large chunk of the fresh funds will be spent on building out the commercial team as the startup looks to scale revenue further in the next year, says Stef van Grieken, Cradle’s CEO and cofounder.
GenAI for pharma
The problem Cradle is trying to solve is that developing new molecules for drugs and chemicals is very time-consuming and expensive. Many of them also fail.
Research and development costs to develop one drug are $280m-380m, and just 1 in 24 projects ends up as a product on the market, says Van Grieken — who previously worked at Google X, the tech company’s “moonshot factory”.
But Cradle’s tech can speed up the discovery and development of proteins — the building blocks of many therapeutics and chemicals — by up to 12 times, he tells Sifted.
The company has created a large database of all known protein sequences — approximately 2bn — and attached labels, like how they respond to certain temperatures.
Cradle’s GenAI models are then trained on these protein sequences and data generated in the startup’s Amsterdam-based wet laboratory to learn to make predictions about how to alter them to get the desired effect.
“Think of us as a Figma,” says Van Grieken. “We’re a design tool for proteins.” Cradle sells its platform as a SaaS product, and charges $500k-1m a year per molecule that a research team is using it for.
Commercialisation
It’s addressing a big potential market. The top 100 biopharma companies in the world typically work on 50-100 molecules at the pre-clinical stage at any one time, says Van Grieken.
While Cradle works with customers across Europe and the US in industries like agriculture and chemicals, 70% of projects using its platform are for molecules in the therapeutics or diagnostics sectors.
Customers include pharma giants like Denmark’s Novo Nordisk — which has seen its valuation skyrocket with weight loss drugs like Ozempic and Wegovy — and Johnson & Johnson in the US.
Its software has gained commercial traction in the past year. The startup is working on 31 projects with 21 customers across Europe and the US, all of which are revenue-making — up from four this time last year, of which just half brought in money.
Pharma is increasingly willing to adopt new tech, shortening the time it takes for startups to sell to or partner with companies in the sector, William McQuillan, partner at Frontline Ventures, told Sifted in February.
Shorter sales cycles make it easier for startups to become revenue-generating quicker, he says. “[Lead time to sell into pharma] has dropped to at least half if not a third [of what it was five years ago].”
Negotiating contracts with big pharma companies can still take some time, though, with evaluation periods taking three months and costing around $500k for the potential customer, says Van Grieken — limiting the speed of growth.
“Every contract you start negotiating in biotech takes about a year from first contact to get the deal signed,” he tells Sifted — before adding that Cradle has managed to close some contracts quicker than that. “We started selling in March so I’m not unhappy [with how many contracts Cradle has].”
AI for drug discovery
Cradle’s one of a wave of techbio startups providing platforms to help big pharma develop new molecules that have raised from investors in 2024.
In February, executives from French biotech Owkin raised $35m for Bioptimus, an LLM to help understand biological processes and in May UK-based Labgenius raised a £35m Series B from investors including M Ventures, the VC arm of pharma company Merck. Atomico participated in a $47m Series C for UK-based Healx in August and Basecamp Research, also UK-based, raised a $60m Series B led by VC firm Singular in September.
These companies all differ from a generation of European drug discovery startups that picked up big rounds in years gone by, like UK-based duo Exscientia and Benevolent AI, in that their main business isn’t actually developing drugs — a hugely costly process that can take years to generate substantial revenue.
New companies focused on drug development have seen a decline in fortunes after listing on public markets in recent years, after candidate failures.
Exscientia was acquired in August by US biotech Recursion for $688m — less money than it had raised from investors — and Benevolent AI’s valuation is down from €1.5bn to $64m, according to Dealroom estimates, after it went public via SPAC in 2021. Both companies have seen losses soar in recent years as revenue has remained low.
While Van Greiken won’t disclose how much revenue Cradle is currently making, he’s hoping the SaaS model can bring in substantial cash quicker than its counterparts.
Alongside scaling the commercial team, Cradle will also use the fresh funds to build out its Amsterdam-based lab — to allow it to collect more data on proteins to feed its generative AI models. A smaller sum — about $1m a year at the moment — will be spent on compute.
Read the orginal article: https://sifted.eu/articles/google-genai-uber-cradle-news/
