Pricewaterhouse Coopers and the National Venture Capital Association released trends from their quarterly MoneyTree Report on venture capital investing on Friday, and while the findings aren’t surprising, they don’t spell much good news for life science companies.
Both biotech and medical device companies saw a marked decrease in the number of deals and dollars compared to last quarter. In fact, life sciences saw 167 deals — the fewest since the first quarter of 2009.
In biotech, though, the dollars being invested actually went up 12 percent from the first quarter of last year. Even with three fewer deals in comparison to Q1 2012, the biotech sector raked in $875 million in the first quarter of 2013, representing the second-largest sector overall for dollars invested. That supports the notion that deals size is getting bigger as VCs focus on later-stage companies.
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In medical devices, though, the opposite seemed to happen. Total dollars invested dropped 20 percent from Q4 of 2012 to $509 million. Compared to Q1 of last year, the number of deals stayed about the same but the dollars invested dropped about 26 percent from $687 million last year.
Over all industries, VC investments fell 12 percent in dollars and 15 percent in number of deals compared to Q4 2012.
“The venture industry has been raising less capital than it has been investing now for several years, and ultimately this dynamic flows through and manifests itself in lower investment levels overall,” said John Taylor, head of research for NVCA, in a statement. “We expect these overall trends to continue until exits and subsequent fundraising activities pick up, and dollars start to flow back into more venture funds.”
To end on a better note, here are a few bright spots from this quarter: early-stage investor Third Rock Ventures raised a $516 million fund, Domain Associates launched a partnership to help startups succeed in China and Hatteras Venture Partners closed a $125 million early-stage fund.
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