Top biotech venture capital funds of 2018

Richard Murphey, 1/5/2019

2018 was the biggest year for biopharma venture funding on record with $17B invested globally into biopharma startups (biopharma = companies developing FDA-regulated prescription drugs). It was also a great year for exits, with 46 big venture-backed IPOs and $37B worth of M&A exits.

Perhaps most encouragingly, the biggest exits were for companies with life-saving medicines and transformational technology: from AveXis' potential gene therapy cure for the most common genetic cause of infant death acquired for $8.7B four years after Series A to Allogene and Rubius' $2B+ market-cap IPOs for the next generation of cell therapy (Allogene was founded in 2017, Rubius was founded in 2013). The industry now seems to value true innovation more than incremental advances and me-too drugs.

As a result, VCs are take on more ambitious risk, and funding some really interesting science.

Who's investing?

As the amount of capital invested in biopharma startups has skyrocketed since 2013, new classes of investors have entered the sector. In particular, Chinese investors have become one of the most active funders of biopharma, both in China and abroad. Crossover investors, who used to focus on later-stage investments, are becoming active at the Series B stage, and even lead the occasional Series A round.

Late stage funding has become highly competitive with many new entrants, but early stage funding is still dominated by traditional biotech VCs.

Notably, generalist tech VCs are slow to enter the sector. Generalist tech VCs are becoming more active in "bio", but generally focus on investing in companies that focus on non-pharma verticals, or that provide products or services to pharma rather than developing their own drugs.

2018 was notable not just for total VC investments in biopharma, but also for the record level of Series A investing. As shown previously, Series A investing is dominated by US-based biotech VCs. Within this subset of investors, only a handful of investors lead more than 2 Series A deals each year.

The top Series A investors are also company creators and many of their A investments go to companies they build in-house. They then syndicate out to crossover investors (public equity investors who invest selectively in private markets, often in the last private round), Chinese investors, and corporate VCs.

If you are interested in accessing the full list of hundreds of investors who invested a total of $17B in biopharma startups in 2018, contact us.

Who's exiting?

In biotech these days, exit is often through IPO. Here are the VCs who made the most through IPO exits in 2018:

This is calculated using data from publicly available SEC filings, which disclose the price per share for venture investments, pre-IPO stock splits, shares held by major investors (with 5% or greater ownership), and in many cases the amount that major investors invested in each private round. This data is incomplete in that it only captures investors who own 5% or more of a company's shares, so smaller investors aren't captured. The amount of venture capital invested for each investor is not always disclosed, and in some cases the shares invested in private rounds do not sum to the total shares owned by the investor at IPO. In these cases the amount invested per investor is not meaningful, or "N/M".

If you are interested in accessing the raw data supporting these calculations, contact us.

M&A exits were less common, but there were two major exits: Celgene's acquisition of Juno for $11B, and Novartis' acquisition of AveXis for $8.7B. Both companies were public at time of exit, and both raised their Series A rounds less than five years before exit. The major investors in AveXis were Deerfield, Roche Venture Fund, and Paul Manning (an angel investor). The major investors in Juno were ARCH Venture Partners, Venrock, the Alaska Permanent Fund (not really a VC) and Bezos Expeditions.

For a comprehensive overview of 2018 biotech venture capital and startups, check out our free 2018 biopharma startup report