With the COVID-19 pandemic raging on, it seemed like an easy call to predict venture funding would see a precipitous decline.
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But so far, not all sectors are seeing cutbacks. While hard-hit industries like travel and hospitality abound, other industries, from biotech to digital health, are attracting rising investment.
Life sciences funding, in particular, remains on a tear. In the first half of the year, companies in the space secured 44 so-called supergiant funding rounds of $100 million or more, an apparent record number, per Crunchbase data. Below, we chart how the numbers compare since 2016.
Investment totals are way up, too. In the first half of 2020, investors globally put $16.55 billion to work across over 450 deals in biotech and life science sectors tracked by Crunchbase 1 at Series A and beyond. That’s up considerably from the same period in 2019, when investors put $13.4 billion to work across nearly 600 known funding rounds. Below we look at totals for the past 4 1/2 years.
It’s not clearly a pandemic-inspired spike, but that’s plausibly a strong contributing factor. Certainly the search for COVID-19 therapies and vaccines has enhanced public interest in the inner workings of biotech. That broadening enthusiasm could extend to investors as well.
It helps that biotech stocks have performed well in recent quarters, particularly companies working on treatments and vaccines for COVID-19. One standout in the unicorn crowd is Moderna, which went public in December 2018, after raising over $2 billion from venture and strategic investors. It currently has a public valuation of over $30 billion, buttressed by positive early results for its mRNA-based COVID-19 vaccine trials. Biotechs are also tapping public markets with increasingly large offerings (which we’ll look at in a follow-on piece).
However, mega-sized financings cover a diverse assortment of sectors including cell engineering, cancer diagnostics, and gene therapy. To illustrate, below, we look at the largest rounds this year:
The big picture is that biotech rounds are getting bigger. That indicates investors want to put more money to work in the space, and opportunities are limited. There’s little reason to think this situation will shift in the near-term. The supply of founders with the expertise and wherewithal to launch and scale a startup in the space has historically been scarce. The supply of money seeking out such founders, however, can expand much more quickly.
Illustration: Li-Anne Dias
Crunchbase categories in the funding search parameters include biotechnology, biopharma, bioinformatics, life science, genetics and neuroscience.↩