Arrowhead goes back to school with more money, new partners.

Flush with nearly $20 million in new capital, nanotechnology firm Arrowhead Research Corp. will increase its investments in several universities and look to add partners.

Pasadena-based Arrowhead works with universities to fund promising technologies in exchange for the exclusive rights to spin them into commercially viable companies. Caltech, Duke University and Stanford University are among the schools the firm is currently working with.

Arrowhead received $19.6 million from two private equity firms. Knott Partners, based in Syosset, N.Y. and an existing shareholder of Arrowhead, increased its stake from 9.5 percent to 12.5 percent. New York-based hedge fund York Capital Management invested $14.6 million, receiving almost 4.2 million shares in the company.

With assets of about $2 billion, York is described as an "event-driven hedge fund" and is likely looking to capitalize on heightened interest in the nanotech space. Last year about $480 million in venture capital flowed into nanotech start-ups, and momentum has intensified over the last few months.

Arrowhead stock had been trading in the $3 range for most of last year. Both York and Knott also received warrants to purchase an additional 1.4 million shares at $5.04 per share.

Staff reporter Hilary Potkewitz can be reached at [phone] ext. 226, or by e-mail at [e-mail].