Infographic – US Biotech Venture Funds Fall in Q3

(NVCA/Pitchbook)

15 Oct. 2022. Venture funds for U.S. biotechnology and pharmaceutical start-ups declined in the third quarter of 2022 from the 2021 record pace, but remain on track for historic highs. National Venture Capital Association and investment market research company Pitchbook released the findings this week in their third-quarter report on venture investing in the U.S. (registration required).

The data show for the months of July through September 2022, new biotech and pharma companies in the U.S. raised $6 billion in 226 transactions, for year-to-date totals of $23.8 billion raised in 738 deals. At its current pace, that funding level would not match the record $38 billion raised in 2021, but would still exceed the $28.7 billion raised in 2020. The number of deals, however, would be less than 1,000 and thus not match the total number of venture transactions in this sector in the previous three years.

The NVCA and Pitchbook data indicate so far this year that venture investors favor later stage deals, those in biotech and pharma companies’ third or fourth venture rounds, known as C and D rounds, a trend continuing for the past five years. At the same time, angel and seed venture deals — which finance companies in their earliest stages — continue at about 20 percent of the total, about the same percentage since 2015. As a result, A and B venture rounds for biotech and pharma start-ups are getting squeezed.

One bright spot in the NVCA/Pitchbook report is continued growth in the size of venture deals in this sector, with the average deal rising from $31.7 million in 2021 to $36.7 million so far in 2022, and median deal size up from $9.8 to $10 million this year. Another hopeful sign is an increase in funds raised by venture investors for future deals. The report says so far in in 2022, venture capital companies raised $150.9 billion, exceeding the $147.2 billion raised in all of 2021, a record-setting annual total.

More from Science & Enterprise:

• Infographic – Sharp Drop in Q3 Venture Funds
• Infographic – Biotech Index Q3 Rollercoaster
• Infographic – Digital Health Keeps Clicking in 2022

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