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Biotech Venture Investment Shows Signs of Recovery in First Quarter
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By Brian Gormley, WSJ Pro
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Good day. U.S. biotechnology venture investment has jumped to a stronger start this year compared with 2023, but startups aren’t all benefiting equally from the rebound.
U.S. biotechs raised $5.1 billion in venture capital in the first quarter, compared with $4 billion in the same period in 2023, according to investment bank William Blair. That puts this year on track to top the full-year 2023 total of $17.3 billion.
Recent acquisitions of small drugmakers and an improving initial public offerings market have brightened the outlook of biotech venture investors.
Still, after two sluggish years for IPOs, venture firms are favoring biotechs with drugs advancing through clinical trials, because these are more likely to go public or be acquired in the near term, over earlier-stage companies.
In the first quarter, 56% of U.S. biotech venture financings were for clinical-stage companies, according to William Blair. That compares with 49% for the full year 2023 and 35% in all of 2022.
In the first quarter, global venture investment across all industries was $58.4 billion, putting this year on a similar pace to 2023, when startups raised $254.5 billion for the year, according to research firm CB Insights.
If publicly traded biotechs continue to perform well, mergers and acquisitions remain strong, and interest rates come down, investors will increasingly move upstream in search of greater returns, leading to higher investment in earlier-stage biotechs, according to Kevin Eisele, managing director, equity capital markets, at William Blair.
For now, however, “There’s more caution in the market,” he added.
And now on to the news...
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Jack Altman’s venture firm Alt Capital is launching an accelerator called Generate aimed at business software startups. PHOTO: DADO RUVIC/REUTERS
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New accelerator. Alt Capital, a venture-capital firm helmed by Jack Altman, is entering a crowded field of accelerators by launching one for business software startups developing artificial-intelligence technologies, WSJ Pro’s Yuliya Chernova reports.
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Jack’s brother, Sam Altman, chief executive of OpenAI, will be one of the speakers and advisers for the program, which will serve about 10 to 15 startups at a time. Other advisers in the accelerator, called Generate, will include investor Elad Gil and Dylan Field, CEO of Figma, a developer of collaborative software tools.
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Jack Altman said Generate will bring on founders of software application companies with generative AI features. “So you’ll have a peer set all in the same AI boat,” he said.
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One of the perks for participants, as well as other future Alt Capital portfolio companies, will be access to Microsoft’s computing infrastructure at no cost. Microsoft will allow Alt portfolio companies to use its graphics processing unit clusters for training and running large language models to create AI features.
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$34.2 Billion
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The amount of U.S. venture-capital investment in the first quarter, according to research firm CB Insights.
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Google Expands In-House Chip Efforts in Costly AI Battle
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Google is making more of its own chips, rolling out new hardware that can handle everything from YouTube advertising to big data analysis as the company tries to combat rising artificial-intelligence costs, The Wall Street Journal reports. The new chip, called Axion, adds to Google’s efforts stretching back more than a decade to develop new computing resources, beginning with specialized chips used for AI work. Google has leaned into that strategy since the late 2022 release of ChatGPT kicked off an arms race that has threatened its dominant position as a gateway to the internet. The chip efforts promise to reduce Google’s reliance on outside vendors and bring it into competition with longtime
partners such as Intel and Nvidia, analysts said. Google officials said they didn’t view it as a competition.
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U.S. Private Equity Sees Hope for Exits
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The number of private-equity exits remains stunted compared with a couple of years ago, but first-quarter activity shows some positive signs for an industry that is running against the clock to return cash to investors, WSJ Pro Private Equity reports. Home Depot’s planned acquisition of building-materials supplier SRS Distribution, disclosed in March, helped push the overall value of U.S. private-equity exits to $62.77 billion in the first quarter, about 16% higher than in the fourth quarter, according to data provider Dealogic. The data includes mergers and acquisitions, initial public offerings and secondary stock offerings. Exit value, however, can shift
significantly from quarter to quarter, skewed by large deals like Berkshire Partners and Leonard Green & Partners’ SRS sale, which at more than $18 billion, would be one of the largest private-equity exits in more than a decade.
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People
Sierra Ventures appointed Shashank Saxena as the firm’s newest managing partner. He was previously general manager of Workday’s VNDLY division.
Biotechnology investor Flagship Pioneering said Amy O'Shea joined the firm as CEO-partner. She was also appointed chief executive of Invaio Sciences. O'Shea was most recently president and CEO of Certis Biologicals.
Valor Capital appointed Dan Schulman as managing partner. He was most recently chief executive of PayPal.
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Varda Space Industries, an El Segundo, Calif.-based startup building infrastructure to make low Earth orbit accessible to multiple industries, closed a $90 million Series B round led by Caffeinated Capital.
Coalesce.io, a San Francisco-based data transformation startup, completed a $50 million Series B round from investors including Emergence Capital.
Windfall Bio, a Menlo Park, Calif.-based developer of technology to capture and transform methane emissions into organic fertilizer, scored $28 million in Series A funding led by Prelude Ventures.
Sprinto, an automated risk and compliance platform with offices in San Francisco and India, secured a $20 million investment led by Accel.
Archetype AI, a startup building a physical AI foundation model, emerged from stealth with $13 million in seed funding. Venrock led the round, with Partner Ganesh Srinivasan joining the company’s board.
Summer, a New York-based workplace student loan benefit startup, added $9 million in Series A funding co-led by Rebalance Capital and SemperVirens.
KIKI World, a Los Angeles-based beauty tech platform, picked up $7 million from investors including a16z crypto and Estée Lauder’s New Incubation Ventures.
Juicer, a San Francisco-based restaurant revenue management and pricing technology provider, was seeded with a $5.3 million investment. York IE led the funding, with Marshall Everson joining the board.
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The digital technology and intelligence arm of tech giant Alibaba said the new pricing strategy covers five core public-cloud categories. PHOTO: /BLOOMBERG NEWS
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