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Q3 Venture Investing Falls, Biotech Remains Hot

Click on image for full-size view (Moneytree Report, PwC and CB Insights)

14 Oct. 2019. Venture capital investments fell in the third quarter of 2019, both in dollar volumes and number of deals, with declines occurring in the U.S. and worldwide. But the MoneyTree report for the quarter, compiled and released last week by PwC and CB Insights, shows technology start-ups, particularly biotechnology, continue to draw the most investor interest.

In the July to September 2019 period, U.S. start-ups raised some $26 billion, a decline of 15 percent from $30 billion raised in the previous quarter. The number of venture deals also declined in the U.S. from 1,555 in the second quarter to 1,304 in the third quarter of 2019. Worldwide venture investments totaled $52 billion in the third quarter, a decline of 7 percent from the second quarter, raised in 3,420 deals. Dollar volumes for venture investments in Asia remained steady, while the rest of the world declined.

Technology companies drew by far the most third-quarter venture investor interest in the U.S. Information technology and related start-ups raised $14.9 billion, of which internet companies gained $10 billion or two-thirds of that total. Mobile-telecommunications and software enterprises raised $2.9 billion and $2 billion respectively. Start-ups in U.S. health care raised $4.9 billion in the third quarter, second only to internet companies.

For the sheer number of deals, however, biotechnology start-ups continue to be among the leading recipients of venture capital in the U.S. Since the first quarter of 2017, biotechnology companies scored 59 or more deals each quarter, usually leading other industries, including internet and other information technology start-ups. Drug development companies rank sixth in number of venture capital deals in the past five years.

Click on image for full-size view (Moneytree Report, PwC and CB Insights)

The company receiving the most venture capital money in the U.S. to date is one reported on by Science & Enterprise, but not in a good way. According to the MoneyTree report, Juul Labs in San Francisco, a maker of e-cigarettes so far raised $13.6 billion from venture investors, more than double the $6.6 billion raised by WeWork in New York, in second place.

Science & Enterprise reported a year ago on a Centers for Disease Control and Prevention survey showing a sharp rise in e-cigarette use by teenagers and younger children, particularly with Juul devices that look like flash drives and thus are easily concealed. Last week, CDC noted that nearly 1,300 people reported lung injuries from vaping, leading to 26 deaths.

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