Silicon Valley might be hands-down the place for exits in the tech industry, but healthcare tells a bit of a different story.
In a new research note from CB Insights, analysts looked at the 50 biggest VC-backed exits among medical device, biotech and pharmaceutical companies in 2012 and 2103, and found that Massachussets came out on top.
Companies in both Massachusetts and the Valley accounted for 13 of those exits, but Massachusetts companies had a greater aggregate exit valuation, as shown in the chart above.
Another interesting trend emerged. The 50 highest-valued exits in healthcare were much more geographically spread out in healthcare than in tech. Just over half of them were companies in Massachusetts and Silicon Valley. Southern California, New Jersey, Pennsylvania and Virginia all overshadowed New York, a big tech VC hub.
However, when CB Insights calculated a value creation ratio for each region – based on the region’s average exit valuation divided by average funding raised by a healthcare company before exit – New York companies appeared to create the most value for investors. That’s a pretty basic calculation, though, and should be taken with a grain of salt as it doesn’t account for other important factors (like time-to-exit) in a company’s “value creation.”
These insights could be especially important at a time when VCs are continuing to put less and less money into healthcare companies.
