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Infographic – Q3 Life Science Venture Funds Tick Up

Bar chart: U.S. life science venture funding by quarter, 2013 to 2023

Click on image for full-size view (PitchBook/National Venture Capital Association)

14 Oct. 2023. Venture investments in U.S. life science and biotechnology start-ups in the third quarter of 2023 rose from the previous two quarters to reach pre-pandemic levels. The number of venture deals in this sector, however, continues to slide, with funding for the newest U.S. businesses receiving the lowest percentage of total funds in a decade.

The quarterly Venture Monitor report, released this week by venture investment research company PitchBook and National Venture Capital Association, shows total venture investments in U.S. life science and biotechnology start-ups increasing to $8.5 billion for July through September 2023. That quarterly total is the largest so far this year, exceeding the $7.4 billion and $7.6 billion recorded in the first and second quarters of 2023. The $8.5 billion in Q3 is also comparable to the $8.6 billion invested in U.S. life science start-ups in the first quarter of 2020, before the Covid-19 pandemic took hold and venture funding spiked into 2022.

The increase in total quarterly investments in this sector, however, masks weaknesses in other indicators. The number of venture deals in the third quarter of 2023 dropped to 395, the fewest transactions per quarter recorded since Q4 2016. Moreover, nearly half (44%) of all life science and biotech investment dollars in the third quarter went to late-stage venture rounds: companies’ third or fourth rounds, called series C and D, with that percentage rising steadily for the past few years. At the same time, the newest U.S. life science and biotech start-ups, those seeking pre-seed or seed funding, experienced  continuing declines, completing 63 deals and attracting only 16 percent of all investments, the lowest quarterly percentage since Q3 and Q4 2013.

At their current pace, venture investments in U.S. life science and biotech entrepreneurs are expected to reach $31.3 billion this year, the largest annual total since 2019. Total venture transactions for the year at the current pace would reach 1,841, roughly comparable to the 1,868 deals recorded in 2018.

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