Venture capital funding for the Life Sciences sector (including Biotechnology and Medical Devices) increased 49% in dollars but declined 18% in deals during the fourth quarter of 2014, compared to fourth quarter of 2013.
According to the MoneyTree™ Report from PricewaterhouseCoopers (PwC) LLP and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters, entitled “Biotech funding surges,” VCs invested $2.8 billion in 202 Life Sciences deals during the quarter, versus $1.9 billion going into 245 deals in the fourth quarter of 2013 and $1.7 billion in 197 deals during the previous quarter in 2014.
Overall, investments for full year 2014 in the Life Sciences sector rose to the highest level since 2007 with $8.6 billion invested into 789 deals, a 29% increase in dollars but a 3% drop in deals compared to 2013.
Biotechnology investment dollars rose 29% compared to 2013 to $6.0 billion, while the number of deals decreased 4% to 470 deals, making it the second largest investment sector for the year in terms of dollars invested, behind the Media and Entertainment sector.
The Medical Devices industry finished 2014 up 27% in dollars to $2.7 billion, and the number of deals remained relatively flat in 2014, compared to 2013.
Investments into Life Sciences companies receiving VC investment for the first time in Q4 2014 totaled $403 million – an increase of 35% from the same quarter in the prior year. Follow-on funding in the fourth quarter of 2014 surged 51% year over year to $2.4 billion.
For the full year 2014, first-time funding in the Life Sciences sector was $1.1 billion and follow-on funding was $7.5 billion, representing growth of 25% and 29%, respectively. For the full year, first-time deals in the sector averaged $7.3 million and follow-on funding deals averaged $11.8 million.
During the fourth quarter of 2014, Boston received $959 million in funding for 32 deals during the quarter, with $928 million going into biotechnology and the remaining $31 million invested in medical devices. The San Francisco Bay Area captured $839 million, New York Metro received $175 million, Research Triangle accumulated $127 million and Chicago rounded the list with $90 million invested.
In 2014, total venture capital dollars invested in the U.S. across all industries was $48.3 billion, including $14.8 billion in the fourth quarter – the highest annual and quarterly investment totals since 2000. “The strong IPO market has played a big role in this robust performance of venture funding, and there are good signs that the trend has legs that can carry it well into 2015,” Vlahos continued. “With a 33 percent increase in funding for early-stage life sciences companies in 2014, start-ups are likely to continue to do well in the year ahead.”
A copy of the report is available for download at www.pwc.com/us/lifesciencesmoneytree