It’s not just M&A that’s driving profitable exits for healthcare venture firms: IPO activity has been strong as well.
Last year, more than 60 VC-backed healthcare companies went public – a 65 percent increase over 2013, a new report from CB Insights says. Indeed, almost half the VC-backed exits in healthcare came from IPOs. This chart, which compares M&A exits to IPO exits, really says it all:
The biotech boom – or bubble – is making its presence known here. Last year, it accounted for 20 percent of the exits – whereas in 2010, biotech only led to 10 percent of the healthcare IPO exits. Medical devices often get a bad rap for having unprofitable exits, but they make up a solid chunk of the exit activity, the report says. Here’s the breakdown by sector:
The report referred to this trend as “barbell-ization” – basically, there’s a large number of companies that raised, in total, less than $20 million – and a large number that raised more than $100 million. Companies whose venture funding fall in between those figures is much less. It’d be interesting to learn which sector receives which level of funding – pharmaceuticals tend to eat up the lion’s share of venture dollars, since they’re so costly to develop. Devices and healthIT can often operate on lower funding.
Also, notably, here’s the breakdown of the hungriest acquisitors:
And these are the venture firms that had the highest number exits:
This one dates back to December, but CB Insights tracked the 20 largest exits of last year. Here are the first five; click here for the 20:
[Image courtesy of Flickr user Simon Cunningham]