SANTA CLARA, Calif.,
Jan. 9, 2020 /PRNewswire/ -- US
healthcare venture fundraising reached $10.7B in 2019, setting a record for the third
consecutive year, according to Silicon Valley Bank (SVB) (NASDAQ:
SIVB), the bank of the world's most innovative companies and their
investors. Investment into venture-backed biopharma, medical device
and diagnostics and tools (Dx/Tools) and healthtech reached
$32B in 2019, only slightly down from
2018.
"In 2019, public markets created significant mark-ups with
up-round IPOs and positive post-IPO performance for biopharma,
dx/tools, device and healthtech companies," said report author
Jon Norris, Managing Director of
SVB's Life Science and Healthcare Practice. "Strong M&A and IPO
performance also led to greater returns for limited partners,
further driving fundraising and investment."
SVB's annual Healthcare Investments and Exits Report
analyzes and predicts trends for venture capital investing,
fundraising and exits that shape the biopharma, medical device,
diagnostics/tools and healthtech sectors in the US and Europe.
Notable Results of 2019:
- Biopharma investments dipped slightly in 2019. However, Series
A investments dropped by 31% as VCs slowed their investment pace
and shifted their focus to existing portfolio companies.
- Robust mezzanine valuations and positive IPO step-ups
encouraged biopharma companies to raise capital and go public,
resulting in the sector's third best IPO output ever, at 50 IPOs in
2019. Twenty of these companies had $1B+ valuations at
year-end.
- Series A medical device deal activity set a record in 2019,
increasing to 105 financings. Increases in imaging, orthopedic and
surgical deals led the uptick in investment activity. The value of
device exits reached a new high, driven by private M&A, IPO
values and public market performance.
- The record value in Dx/Tools exits was largely driven by IPOs
in the sector, with R&D tools companies comprising six of nine
IPOs and two IPOs valued at more than $2B.
- Investments into healthtech substantially increased during the
past three years, making it the fastest-growing healthcare sector.
Healthtech IPOs emerged from a two-year drought, with four of the
eight IPOs ending the year at $1B+ valuations.
SVB's Outlook for 2020:
"We can expect to see companies build on the momentum of 2019's
IPO surge in the first half of 2020, but US fundraising will likely
slow in the second half of the year," said Norris.
- SVB anticipates total healthcare venture fundraising to slow
but remain healthy, reaching about $9B compared to $10.7B in 2019.
- Biopharma investments are expected to decrease by 10-15% as
large private crossover-lead deals decline.
- Dx/Tools M&A could include Dx test and Dx analytics
companies by tech acquirers and some biopharma acquisition of
AI/ML-focused R&D tools companies.
- Healthtech investments should continue to climb in 2020, led by
investments in provider operations and alternative care
companies.
The Life Science and Healthcare Practice of Silicon Valley Bank
delivers specialized solutions and market expertise in the areas of
biopharma, medical device, diagnostics and tools, digital health
and healthcare services, with a focus on helping companies of all
sizes grow.
Read the full Healthcare Investments and
Exits report
here: svb.com/healthcare-investments-and-exits
About Silicon Valley Bank
For more than 35 years, Silicon Valley Bank (SVB) has helped
innovative companies and their investors move bold ideas forward,
fast. SVB provides targeted financial services and expertise
through its offices in innovation centers around the world. With
commercial, international and private banking services, SVB helps
address the unique needs of innovators. Learn more at svb.com.
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SOURCE Silicon Valley Bank