Biotech investing is sizzling right now, and despite all the attention that the Boston hub gets, the Bay Area is still number one.
PricewaterhouseCoopers and the National Venture Capital Association have been slicing and dicing the venture numbers for the life sciences industry in the second quarter in their MoneyTree report and found that the San Francisco area led the country in new investing with $866 million going into 54 deals for biotech and med tech. Beantown came in second, with $540 million. San Diego held its traditional spot as number 3, with $167 million. Interestingly, New York captured fourth place with $125 million and the Great Lakes region rounded out the top 5 with $123 million.
As FierceBiotech noted earlier this year, San Francisco also came out on top for 2013. Boston and San Diego rounded out the top three, getting the lion's share of all the cash. But New York and the Great Lakes area are new to the top 5, potentially pointing to a significant shift. Biotech futures are based on the flow of venture capital dollars. And that cruel fact has hit some secondary hubs hard.
Just crunching the dollars on biotech, a whopping $1.8 billion was committed to 122 deals. Not only do those quarterly numbers beat out anything back to the honeymoon era of 2007, it's the best second-quarter figure for the industry since at least 1995, when these analysts first started gathering the numbers.
After the 2008 financial crisis, venture investing in biotech in general settled back to a $4 billion to $4.5 billion pace per year. So the $1.8 billion figure stands out in a big way.
What's driving all the activity? Not surprisingly, with the IPO window open now for more than 18 months, venture groups have been winning some badly needed exits at strong returns. And the survivors have been reaping big new funds for the next generation of biotech companies.
"The uptick in VC investing in Q2 is a direct reflection of the activity we're seeing in the public markets," said Greg Vlahos, life sciences partner at PwC. "As VCs take advantage of the open initial public offering window and the high valuations in the mergers and acquisitions market to exit, they are putting capital back to work for a new cycle of investments. The competition for dollars among the next generation of life science businesses remains, and businesses looking to attract VC investment need to have compelling stories and a roadmap for their product strategies to showcase their path forward."
- here's the release