VC Funding in Biotech Remains Above Pre-Pandemic Levels Raising USD 136.3 Billion in 2023

Unlike many other markets, biotech saw impressive funding activity last year as venture capitalists continued to pour money into innovative platforms that could revolutionize the sector. Although VC funding in biotech remained below the all-time high of 2021, the total amount of fresh capital in the market was still quite impressive.

According to Stocklytics.com, biotech companies and start-ups raised USD 136.3 billion in 2023, showing that funding activity was above pre-pandemic levels.

The increasing use of biopharmaceuticals, bioinformatics and bio-industrial products has helped the biotech sector to grow enormously over the years. The entire market is expected to continue growing at a CAGR of 7.5% and reach a value of over one trillion dollars by 2028.

VC investors have played an important role in the growth of the market by providing a much-needed lifeline for biotech innovation. Even though funding activity in the market has declined since its peak in 2021, investors remain excited about the long-term potential of the sector.

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According to Crunchbase, biotech companies and start-ups raised almost USD 150 billion in funding rounds in 2021, when the market was at its peak – the highest figure to date. This also represents a significant increase on previous years, when the sector received between USD 60 and 90 billion in fresh capital each year.

However, financing activity slowed in 2022, with biotech companies raising USD 139.3 billion in that year alone. The statistics show that the slowdown continued last year, with the total amount of funding falling by a further USD 3 billion year-on-year to USD 136.3 billion, the third highest amount of funding in the history of the market. This figure is even more impressive when compared to other sectors that also saw strong VC funding activity last year. In comparison, AI companies and start-ups raised USD 50 billion in 2023, 2.5 times less than the biotech sector.

Almost 60% of total funding in 2023, i.e. USD 79.7bn, was raised in the first half of the year, an increase of almost 40% compared to the same period in 2022. However, the second half of the year saw a decline in fundraising activity, with biotech companies raising USD 56.6bn, 30% less than in the second half of 2022. The number of investments also decreased compared to 2022 figures. According to Crunchbase, the biotech sector recorded 1,330 VC investments last year, compared to 1,651 in 2022.

With more than USD 136 billion raised in financing rounds last year, the cumulative amount of financing in the biotech sector has risen to almost USD 850 billion.

More than 70% of this figure, i.e. USD 600 billion, went to companies from the United States, with California being the leading location. European biotech companies raised the second highest value of funding rounds at USD 121 billion, and their Asian counterparts followed with USD 96.7 billion in total funding.

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