Chai Discovery, an AI startup focused on drug discovery, has raised US$70 million in a series A round led by Menlo Ventures.

The round also included investments from Yosemite, DST Global Partners, SV Angel, Avenir, DCVC, and existing backers such as Thrive Capital, OpenAI, and Dimension.

Chai Discovery was founded in 2024 by Joshua Meier, who previously worked at Absci, Facebook AI, and OpenAI, Jack Dent, formerly of Stripe, and AI researchers Matthew McPartlon and Jacques Boitreaud.

Mikael Dolsten, former chief scientific officer at Pfizer, is set to join the company’s board of directors.

The company develops AI models for predicting and designing interactions between biochemical molecules.

The new funding will be used to further develop the platform and onboard select partners.

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🔗 Source: Chai Discovery

🧠 Food for thought

1️⃣ AI drug discovery attracts record investment despite industry challenges

Chai’s $70 million Series A reflects a broader surge in AI healthcare investment, with startups in this sector raising $10.5 billion across 511 deals in 2024 alone1.

This represents part of $60 billion invested in AI healthcare startups over the past decade, with $30 billion coming in just the last three years1.

The investment enthusiasm stems from the traditional drug development process’s severe inefficiencies, taking 10-15 years and costing $1 billion to $2.6 billion per drug, with a 90% failure rate between phase I trials and regulatory approval23.

Major competitors are securing even larger rounds, with Isomorphic Labs raising $600 million in its first external funding round led by Thrive Capital and GV4.

The scale of these investments suggests investors believe AI can meaningfully address the pharmaceutical industry’s core productivity challenges, where traditional methods often require screening millions of antibodies to find viable candidates.

2️⃣ Technical breakthroughs drive investor confidence in computational drug design

Chai-2’s claimed 20% hit rate for antibody design represents a 200-fold improvement over the previous computational state-of-the-art of 0.1%[original article].

This performance leap mirrors other AI breakthroughs that have attracted significant funding. Companies like Exscientia have already advanced AI-designed drugs into clinical trials using their Centaur Chemist platform3.

The technical achievement addresses a fundamental bottleneck in drug discovery, where traditional laboratory methods require screening vast numbers of candidates with extremely low success rates.

While no AI-generated drugs have yet received FDA approval, candidates like HLX-0201 for fragile X syndrome are progressing through clinical trials, providing validation for the computational approach5.

The combination of Chai’s technical performance and experienced founding team, including alumni from Absci, Facebook AI, OpenAI, and Stripe, appears to have convinced investors that AI can transform biology “from science to engineering.”

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