Healthcare Sector Sees Steady Rise in VC Investment and Fundraising; Silicon Valley Bank Releases 14th Edition of Mid-Year Healthcare Investments and Exits Report

Rhea-AI Summary

Silicon Valley Bank's 2024 Mid-Year Healthcare Investments and Exits Report reveals a strong year for biopharma and steady rise in VC investment across the healthcare sector. Key findings include:

- 89% of US VC funds at or above $25M hit their fundraising targets
- 55 biopharma companies secured deals of $100M or more
- VC fundraising established a new baseline of just under $20B raised per year
- Over 25% of US healthcare companies closing VC deals of $15M+ reported flat or down rounds
- H1 2024 was the largest half for Series A biopharma investing since H1 2021
- Investment in rare disease companies is improving but still behind pre-pandemic levels

The report suggests 2024 could finish strong, with potential momentum from mega deals, AI leveraging, and public market performance in the healthcare sector.

Positive

• 89% of US VC funds at or above $25M hit their fundraising targets, second-highest rate in history
• 55 biopharma companies secured deals of $100M or more
• VC fundraising established a new baseline of just under $20B raised per year
• H1 2024 was the largest half for Series A biopharma investing since H1 2021
• H1 2024 was the second strongest half for Series A healthtech investment since 2021

Negative

• Over 25% of US healthcare companies closing VC deals of $15M+ reported flat or down rounds
• Investment in rare disease companies ($508M in H1 2024) still falls behind pre-pandemic levels ($2.1B in 2019)
• Later-stage healthtech companies with high pandemic-era valuations have generally fallen into a valuation trap
• Challenging year for raising capital in the Dx/Tools sector

2024 shaping up to be a strong year for biopharma

SAN FRANCISCO, Aug. 7, 2024 /PRNewswire/ -- In the first half of 2024, 89% of US venture capital (VC) funds at or above $25M hit their fundraising targets, marking the second-highest rate in history, according to the latest report from Silicon Valley Bank (SVB), a division of First Citizens Bank. The 2024 report also found that the biopharma sector could be on track for a record-setting year after reaching high investment levels, particularly in larger deals, with 55 biopharma companies securing deals of $100M or more.

Leveraging 20 years of research and proprietary data analysis on healthcare venture trends, SVB's 2024 Mid-Year Healthcare Investments and Exits Report analyzes venture capital investing, fundraising and exit activity across the healthcare sector.

The latest report found that VC fundraising in the first half of the year has found its footing, with fundraising forming a new baseline of just under an estimated $20B raised per year. As valuations remain under increased scrutiny, more than 1 in 4 of US healthcare companies that closed a venture capital deal of at least $15M in 2024 reported a flat or down round, according to SVB. 

"Companies are still working to achieve growth that matches high pandemic-era valuations," said Jackie Spencer, Head of Relationship Management for Life Science and Healthcare Banking at Silicon Valley Bank and author of the report. "While each sector has its own story to tell, it's clear that 2024 activity shows investment in life sciences and healthcare is finding a path forward despite headwinds. With a continued focus on prioritizing profitability over growth and rationalizing valuations, we expect healthy and sustainable investment for the second half of the year." 

SVB's mid-year report also provides in-depth analysis for sectors across healthcare including biopharma, healthtech, medical device, diagnostics/tools (dx/tools). 

Key Findings: 

• Biopharma: Private investment in biopharma had a strong start to the year, with H1 2024 being the largest half for Series A biopharma investing since H1 2021. Investment in rare disease companies ($508M in H1 2024) is on pace to improve from 2023, but still falls behind the dollars raised pre-pandemic ($2.1B in 2019).
• Healthtech: H1 of 2024 was the second strongest half for Series A healthtech investment since 2021. For later-stage companies, those that received lofty valuations during the height of the pandemic healthtech bubble generally appear to have fallen into a valuation trap.
• Medical Device: Fundraising to finance a pivotal study for regulatory approval is trending, and some companies have already gained capital due to business performance and acquisitions.
• Dx/Tools: While it's been a challenging year raising capital for DX/Tools, investors are aiming to reduce the risks associated with innovation that drives value creation, seeking solutions that define new categories.
• 2024 could finish on an upswing heading into next year, dependent on sectors capable of spurring market-wide momentum in the broader industry. These focus areas include healthcare companies landing mega deals ($100M+), leveraging AI, and performing well in the public markets.

Learn More 
Read the complete 2024 Mid-Year Healthcare Investments and Exits report here: Healthcare Investments and Exits Mid-Year Report | Silicon Valley Bank (svb.com)

SVB is a leader in providing market insights on sectors across the innovation economy. For the complete library of SVB's signature reports, please visit Market Research Industry Trends & Insights | Silicon Valley Bank (svb.com)

About Silicon Valley Bank 
Silicon Valley Bank (SVB), a division of First Citizens Bank, is the bank of some of the world's most innovative companies and investors. SVB provides commercial and private banking to individuals and companies in the technology, life science and healthcare, private equity, venture capital, and premium wine industries. SVB operates in centers of innovation throughout the United States, serving the unique needs of its dynamic clients with deep sector expertise, insights, and connections. SVB's parent company, First Citizens BancShares, Inc. (NASDAQ: FCNCA), is a top 20 U.S. financial institution with more than $200 billion in assets. First Citizens Bank, Member FDIC. Learn more at svb.com. 

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SOURCE Silicon Valley Bank

FAQ

What percentage of US VC funds hit their fundraising targets in H1 2024?

89% of US venture capital funds at or above $25M hit their fundraising targets in the first half of 2024, marking the second-highest rate in history.

How many biopharma companies secured deals of $100M or more in H1 2024?

55 biopharma companies secured deals of $100M or more in the first half of 2024.

What is the new baseline for VC fundraising in healthcare according to the SVB report?

The report indicates that VC fundraising has established a new baseline of just under an estimated $20 billion raised per year.

How did Series A biopharma investing perform in H1 2024?

H1 2024 was the largest half for Series A biopharma investing since H1 2021, indicating strong performance in this sector.

What percentage of US healthcare companies reported flat or down rounds in 2024?

More than 1 in 4 (over 25%) of US healthcare companies that closed a venture capital deal of at least $15M in 2024 reported a flat or down round.