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This year is shaping up as the first we’ve seen in which biotech and healthcare startups receive a majority of U.S. Series A commitments.
So far in 2024, biotech and health companies have pulled in around $5.6 billion across 110 Series A rounds, per Crunchbase data. That accounts for 53% of all funding at the Series A stage, which is a closely watched barometer for the startup ecosystem.
The biotech sector’s comparatively strong showing comes as overall Series A dealmaking looks on track to come in a bit above last year’s totals. However, funding remains down from 2022 and much, much lower than in 2021, which was a record-breaking year for startup investment overall.
For perspective, we charted out Series A investment and deal counts for the past five calendar years below.
For healthcare and biotech specifically, meanwhile, the five-year Series A breakdown looks like this.
Not more rounds, but bigger ones
Notably, biotech and health companies aren’t gobbling up a larger share of rounds. They account for less than a third of this year’s Series A deals.
However, they are dominating in one subset of financings: the supergiant round.
Of the 10 largest Series A rounds this year, six are biotechs. This includes the largest financing, which went to Xaira Therapeutics, a San Francisco-based startup using AI for drug discovery and development. The company secured more than $1 billion of committed capital in April from lead investors Arch Venture Partners and Foresite Capital.
The second-largest Series A also went to a biotech, Mirador Therapeutics, which is focused on precision medicine for chronic inflammation and fibrotic disease. The San Diego company landed $400 million in a March round, also led by Arch.
The preponderance of biotech megadeals isn’t limited to Series A rounds. A recent Crunchbase analysis of venture deals of $100 million or more this year found that 38 such financings went to biotech and healthcare companies, more than any other sector.
In the tranches
When companies announce large funding rounds, it doesn’t necessarily mean they’re getting all the money upfront. For biotech in particular, it’s not uncommon to see rounds paid out in tranches, which may be tied to predetermined milestones.
It’s also likely that heavily funded companies aren’t expecting many more large rounds before tapping the public markets.
For biotech especially, we see a lot of startups launching IPOs before they raise a Series B or C. To illustrate, we put together a sample list of 10 biotechs that went public in the past couple years with Series A or B as their last venture round.
For tech, Series A stats look less encouraging
As biotech and healthcare companies scoop up a larger portion of Series A financing, there’s a smaller slice going to startups in other sectors.
Given that so much of what remains is going to hot startups in generative AI, there appears to be even less to go around for those in other spaces.
This is worrisome given that there is a vast supply of seed-funded companies that raised capital when investment was hitting record highs. Many of those are at the stage where raising a Series A round would be the next logical step for founders. Whether investors agree remains to be seen.
Related Crunchbase Pro queries
Related reading
- Megadeals Explode Early In The Year As US Startups Gobble Up More $100M+ Rounds
- The Shrinking Series E: More Senior Startups Raise Smaller Follow-On Rounds
Illustration: Dom Guzman
