This is shaping as much as be the first yr in which biotech and healthcare startups receive the majority of US Series A commitments.
So far in 2024, biotech and healthcare firms have raised roughly $5.6 billion in 110 Series A rounds per yr. Crunch Base data. This represents 53% of all Series A funding, which is a closely watched barometer for the startup ecosystem.
The relatively good performance of the biotechnology sector is resulting from the undeniable fact that the total number of Series A transactions appears to be barely higher than last yr’s total. However, funding stays lower in comparison with 2022 and much, much lower than in 2021, It was an overall record yr for startup investment.
For perspective, below we have compiled a list of Series A investments and transactions from the last five calendar years.
Meanwhile, especially in healthcare and biotech, the five-year Series A lineup looks like this.
Not more rounds, but larger
It’s price noting that biotech and health care firms don’t absorb the bulk of the rounds. They account for lower than a third of this yr’s Series A deals.
However, they dominate one subset of funding sources: the supergiant round.
With The 10 largest series A rounds this yr, six of them are biotechnologies. This includes the largest financing, which included, among others: Xair therapy, a San Francisco-based startup using artificial intelligence for drug discovery and development. In April, the company secured over $1 billion in capital from leading investors Arch Venture Partners AND Foresite Capital.
The second largest series A also went to biotech, Mirador of Therapy, which focuses on precision medicine for the treatment of chronic inflammation and fibrotic diseases. The San Diego-based company, led by Arch, raised $400 million in a March round.
The advantage of biotech megadeals is not limited to Series A rounds. The latest Crunchbase evaluation of enterprise transactions valued at $100 million or more this yr, it found that 38 such funds went to biotech and health care firms, greater than to any other sector.
In tranches
When firms announce large rounds of financing, it doesn’t necessarily mean they’ll receive all the money upfront. Particularly in biotech, it is not unusual for rounds to be paid out in tranches, which could also be tied to pre-defined milestones.
It’s also likely that high-cap firms don’t expect many more large rounds before hitting the public markets.
Especially in biotech, we see many startups launching an IPO before they have a Series B or C. To illustrate this, we have prepared sample list of 10 biotechnologies that went public in the last few years, and series A or B was their last round of enterprise.
When it involves technology, the A-series statistics look less encouraging
As biotech and healthcare firms take a larger share of Series A funding, a smaller share goes to startups in other sectors.
With so much of what’s left going to hot generative AI startups, it looks as if there’s even less left to take advantage of for those working in other areas.
This is concerning given the huge number of seed-funded firms that raised capital at a time when investment was reaching record levels. Many of them are at the stage where winning the Serie A round can be the next logical step for the founders. Time will tell whether investors will comply with this.
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