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Venture Funding Down in 2020, Life Sciences Stay Hot

Seed and angel investing

(Crunchbase)

24 July 2020. For the first half of 2020, venture investing declined compared to 2019, but life science and biotechnology investments continued growing for the year. Crunchbase News reported the findings for investments in North American start-ups from an analysis of deal activity in its database, reflecting the first full impact of the Covid-19 pandemic on venture capital.

In the first half of 2020, according to Crunchbase, venture and private equity investing in North American businesses totaled $64 billion, down $3 billion from the $67 billion reported in the second half of 2019, and down $6 billion from the first half of 2019. For the second quarter of 2020, venture investments came to $29.8 billion, down 12 percent from the first quarter of 2020, and a decline of 18 percent from the first quarter of 2019.

Declines in venture investment dollars in North American businesses were felt particularly hard by smaller venture deals. Larger investing deals, those of $100 million or more, totaled $15.6 billion during the second quarter of 2020, down only slightly from the $15.8 billion in the first quarter. But deals of less than $100 million totaled $14.2 billion in the second quarter, down 21 percent from the $17.9 billion in the first quarter.

In addition, very early-stage investing — seed rounds and angel investments — declined sharply from the first quarter for North American businesses. The number of these early investment deals fell below 700 in the second quarter, less than half of the 1,679 deals reported in the fourth quarter of 2019 and 1,513 deals in the first quarter of 2020. Likewise the total of  $1.1 billion invested in seed round and angel investments in the second quarter is barely half of the $2.1 billion invested in the fourth quarter of 2019.

Life science and biotechnology start-ups, remained hot venture targets during the first half of 2020, in spite of the pandemic, or maybe because of it. Crunchbase says investors put $16.6 billion into life science and biotech start-ups in 450 deals, covering first venture rounds and later, during the first half of 2020. The $3.3 billion dollar volume gain is a 16 percent increase over the second half of 2019.

And venture investors in life sciences and biotech preferred larger deals as well. The number of venture rounds of $100 million or more totaled 44 in the first half of 2020, eclipsing the 28 to 32 jumbo-sized deals in each half of the year since 2018.

Science & Enterprise reported on the largest of these large-size deals in June, when Sana Biotechnology Inc. in Seattle raised $700 million in its first venture round. Sana Biotechnology develops regenerative medicine therapies with stem cells designed and produced in advance, then dispensed like prescription drugs.

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