Biotech: Forever Young

    Over recent years, venture investments in Biotech have been substantial; that is no secret.  Perhaps what may not be as widely observed is how those investments have changed in the company stage over the years.  It would appear that money is moving toward more mature companies. 

    Global VC Investments in Biotechnology, By Stage

    IQ500_Biotechnology Investments 2017 to 2021

    Source: S&P Capital IQ

     

    Big Picture Numbers

    • Total venture capital raised in Biotech trended upwards over the past five years ending 2021, making a peak in 2021 at $23.3 billion in total capital raised. 
    • Deal counts have grown at a strong clip of 24% CAGR between 2017 to 2021, from 151 deals to 442.
    • In aggregate, Biotech emerging growth companies have raised $54.8 billion in capital from VC investors over the past five years.
     

    Share of Global VC Investments in Biotechnology, By Stage

    IQ500_Biotechnology Investments By Series 2017 to 2021

    The Drill Down

    • Breaking down biotech deals by stage, Series A and Series B have seen the most significant changes in dominance over the past five years.
    • Series have seen its share of total capital raised decline from 44% to 37%, whereas Series B has seen its share increase from 30% to 43% in 2021

     

    A Biotech Banker's Perspective

    by Fritz Reichenbach, Managing Member of Third500 LLC

    "Biotech deals remain one of the spotlights of general health care venture space.  Biotech attracts billions in capital yearly, among the largest of any healthcare vertical.  The surge from 2020 to 2021 was largely driven by the enthusiasm of the broad investor base and an increasingly aware LP community for the importance of biotechnology research due to the global pandemic.  This is driving new capital into funds focused on the space.  When we look at the stage breakdowns, what we observe both on the ground and through data, is that the space remains young and vibrant.  While the dominance switch from Series A to Series B signals an increasingly mature space, it remains heavily tilted toward younger companies.  Given all this, we expect Biotechnology VC to generate strong returns for investors in the years to come as they mature and find their exits."
    Post by IQ500
    August 19, 2022