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As Market Struggles, LPs Raise the Bar for Investors
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By Brian Gormley, WSJ Pro
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Good day. Healthcare venture capitalists are attracting less funding this year, yet some firms with long records of success or innovative strategies are meeting or exceeding their fundraising goals.
U.S. healthcare venture capitalists raised $5 billion in the first half of this year, according to Silicon Valley Bank, whose analysis includes healthcare-only firms and the healthcare allocations of those that also invest in other sectors.
Compare that to 2024, when these investors corralled $23 billion for the full year. This year could turn out to be the weakest since 2016, when healthcare VCs raised $9 billion, according to SVB.
Delivering returns has grown more difficult as the market for initial public offerings has slumped. As a result, limited partners have been favoring experienced investors.
Two recent examples are Frazier Life Sciences, which has raised $1.3 billion for its latest venture fund, Frazier Life Sciences XII, and Omega Funds, which picked up $647 million for Omega Fund VIII. Both firms have successfully exited several portfolio companies in recent years.
Another, Modi Ventures, recently gathered $88 million for its second fund, attracting LPs to its strategy of investing at the intersection of artificial intelligence, biology and medical technology. The firm, which invests in venture funds and startups, beat its fundraising goal of $75 million, said Sahir Ali, Modi’s solo general partner.
And now on to the news...
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Globally, nine biotechs went public in the first half, a slower pace than 2024, according to Silicon Valley Bank. PHOTO: PATRICK HERTZOG/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Biotech venture capital. Relentless market uncertainty and narrowing opportunities to take startups public are leading venture capitalists to take a step back from biotechnology.
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U.S. and European biotechs raised $11.2 billion in venture capital in the first half, according to Silicon Valley Bank. That is off last year’s pace, when these startups collected $28.6 billion for the full year.
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If this year’s pace continues, it will be the slowest for biotech venture funding since 2023, when startups rounded up $19.1 billion, according to SVB.
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Shifting macro factors like tariffs and layoffs at the Food and Drug Administration have made investors cautious. “Investors are more selective across the board,” said Jackie Spencer, SVB’s head of relationship management for life science and healthcare banking.
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$11.2 Billion
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The amount of venture capital U.S. and European biotechnology startups raised in the first half, according to Silicon Valley Bank.
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Bristol Myers Squibb and Bain Capital Form Immunology Company
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Bristol Myers Squibb and Bain Capital are forming a new biopharmaceutical company focused on therapies for autoimmune diseases. The new company will be created with $300 million in financing led by Bain Capital, including funds from the Canada Pension Plan Investment Board. The company will begin with five potential treatments for autoimmune diseases in-licensed from Bristol-Myers Squibb, which will retain 20% equity in the new company. Bristol Myers Squibb will also be entitled to royalties and milestones from the potential treatments. Biotech executive Daniel Lynch, currently chairman of the board at Xilio Therapeutics, will lead the new company as chief executive.
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PHOTO: SAURABH SIROHIYA/ZUMA PRESS
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Not your typical listing. The IPO of design-software company Figma should be a welcome reprieve for a venture market struggling to generate cash. The San Francisco company priced its initial public offering at $33 a share on Wednesday, above the expected range of $30 to $32. That implies a market capitalization of about $19.8 billion on a fully diluted basis, according to Renaissance Capital, a provider of pre-IPO research and IPO-focused ETFs. The company’s shares will debut on the New York Stock Exchange on Thursday.
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“Figma isn’t just any VC-backed tech IPO. It is a behemoth. There’s a very small list of VC-backed companies valued in the range of $20 billion,” said Matt Kennedy, a senior strategist at Renaissance Capital.
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People
Pharmacy navigation platform Scripta Insights appointed Ken Pickering as chief technology officer. He previously served as vice president of engineering at Going.
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Ambience Healthcare, a San Francisco-headquartered AI platform providing documentation and coding for health systems, scored $243 million in Series C funding co-led by Oak HC/FT and Andreessen Horowitz.
Artbio, a Cambridge, Mass.-based radiopharmaceutical startup developing therapies to treat a range of cancers, completed a $132 million Series B round co-led by investors including Sofinnova Investments and B Capital.
Small Door Veterinary, a New York-based veterinary-care startup, picked up $35 million in equity financing led by Valspring Capital, alongside $20 million in debt.
Nara Organics, a New York-based maker of a USDA-certified organic whole milk infant formula, launched with $32 million in funding from investors including AlleyCorp and BBG Ventures.
Arbital Health, a San Francisco-based startup providing critical infrastructure for healthcare providers and payers to manage risk-based contracts, landed $31 million in Series B funding led by Valtruis.
C8 Health, a New York-based best practices implementation platform for healthcare, secured $12 million in Series A financing. Team8 led the round, which included participation from 10D and Vertex Ventures Israel.
Journey, a New York-based provider of proactive mental health technology to employees, closed an $8 million Series A round led by Cambrian Growth Partners.
JotPsych, creator of an AI-powered scribe for behavioral health, was seeded with a $5 million investment led by Base10 Partners.
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The NFL has overhauled its rules and protocols in an effort to make the game safer. PHOTO: MATT SLOCUM/AP
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