Venture capital (VC) funding for biotechnology (defined as biomedicine) is changing, according to an analysis of data from Dow Jones VentureSource. Fewer VC firms are investing in early-stage companies. In 2011, only 194 VC or corporate VC firms were involved in biotech financings, down from 313 in 2007. Funding for innovative companies declined 34.0% between 2007 and 2011 to $3.5 billion. New biotech firms are also receiving less funding, as early-round funding as a percentage of all capital rounds fell from 40% in 2007 to 31% last year. However, the average size of first-round funding grew 31.3% to $13 million over the five-year period. More money is being invested up front with future rounds contingent on specific milestones. Firms at the “product development stage” received over 70% of VC investments from 2008 to 2011. US biotech firms remain the largest recipient of VC funds, receiving $2,499 million last year compared with the second-largest group, European firms, which received $785 million. By indication, immunotherapeutic and vaccines companies led all biotech firms in VC funding, receiving almost $4 billion in 262 rounds from 2007 to 2011. Small-molecule firms and protein therapeutic firms received the next-highest amounts. However, oncology led all indications over a 10-year period.

Source: Nature Biotechnology