In recent years, biotech venture funding has experienced a significant surge, with corporate investors playing an increasingly prominent role in this trend. Our analysis at Crunchbase reveals that corporate biotech investors have sharply increased their investments in startup rounds they led in 2018, with overall participation in rounds valued at nearly twice year-ago levels.
The Rise of Biotech Venture Funding
Global biotech venture funding rose significantly last year and has been running at historically high levels for the past few years. According to Crunchbase data, biotech startups globally raised just shy of $29 billion in seed through late rounds from all investors in 2018. This represents a substantial increase from $19 billion in 2017.
Corporate Investors Lead the Charge
A significant minority of biotech deals involve corporate backers, with investors in our corporate biotech index participating in 138 seed, venture or growth-stage funding rounds in 2018, up from 122 in 2017. The average biotech deal has been getting bigger, reflecting the rise of supergiant funding rounds and deals valued in the hundreds of millions.
Funding Totals on the Rise
The total value of rounds with a corporate backer was $8 billion in 2018, including contributions from all investors. This represents a significant increase from $4.2 billion in 2017. Corporate bio investors led at least 30 funding rounds in 2018, with an aggregate value of $1.7 billion, approximately triple the levels seen in 2017.
Active Players in the Market
Some corporate biotech players are far more active than others. For example, Novartis and its Novartis Venture Fund have participated in 15 deals with an aggregate value of nearly $730 million since 2018. Over the past three years, they have done 40 deals, with an aggregate value of $1.6 billion.
Celgene: A Prime Example
Another active player is Celgene, which has agreed to be acquired by Bristol-Myers Squibb earlier this year (the deal hasn’t closed yet). The New Jersey company has participated in 30 deals valued at nearly $1.8 billion over the past three years, including 13 since the beginning of 2018.
Outsourcing Innovation
The rise in corporate VC investment in pharma and biotech appears to reflect a long-term trend toward supplementing and even supplanting in-house R&D with venture investment. Recent quarters demonstrate that it’s becoming an increasingly expensive strategy, as round sizes grow and investors devote more dollars to funding hot startups.
Methodology
Our analysis at Crunchbase has taken into account the following factors:
- Deal categorizations: Adjustment to deal types to ensure consistency in our data set.
- Corporate biotech index participation: Participation of corporate investors in seed, venture or growth-stage funding rounds.
- Funding totals: Total value of rounds with a corporate backer.
Conclusion
Biotech venture funding has experienced significant growth in recent years, with corporate investors leading the charge. As the industry continues to evolve, it will be interesting to see how these trends shape the future of biotech investment.
Related Topics
- Biotech
- Venture Capital
- Pharmaceutical Industry
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