Unlike many other markets, biotech saw impressive funding activity last year as venture capitalists continued pouring money into innovative platforms that could revolutionize the sector.
Although VC funding in biotech remained below the market’s all-time high in 2021, the total amount of fresh capital in the market was still quite impressive.
According to data presented by Stocklytics.com, biotech companies and startups raised $136.3 billion in 2023, showing that funding activity remained above pre-pandemic levels.
Biotech Companies Raised 2.5x More Money than AI Startups
The surging use of biopharmaceuticals, bioinformatics, and bio-industrial products has helped the biotech sector grow tremendously over the years. The entire market is expected to continue growing at a CAGR of 7.5% and hit over one trillion dollars by 2028.
VC investors have had a major role in the market’s growth, providing a much-needed lifeline for biotech innovation. And while the funding activity in the market may have dropped from an all-time peak in 2021, investors are still quite excited about this sector’s long-term potential.
According to Crunchbase data, in 2021, when the market peaked, biotech companies and startups raised close to $150 billion in funding rounds, the highest figure to date. This also represented a substantial increase from the previous years, when the sector saw between $60 billion and $90 billion of fresh capita per year.
However, in 2022, the funding activity slowed down, with biotech companies raising $139.3 billion that year alone. Statistics show the slowdown continued last year, with the total funding amount slipping by another $3 billion year-over-year to $136.3 billion, the third-highest funding amount in the market’s history.
This figure is even more impressive when compared to other sectors that also witnessed strong VC funding activity last year. In comparison, AI companies and startups raised $50 billion in 2023, or 2.5 times less than the biotech sector.
Nearly 60% of total funding in 2023, or $79.7 billion, was raised in the first half of the year, showing almost a 40% increase compared to the same period in 2022.
However, the fundraising activity and the number of investments dropped in the year’s second half, with biotech companies raising $56.6 billion, or 30% less than in H2 2022. According to Crunchbase, the biotech industry saw 1,330 VC investments last year, down from 1,651 in 2022.
Almost $850 Billion Raised in Funding Rounds so Far
With more than $136 billion raised in funding rounds last year, the cumulative funding amount in the biotech space has climbed to almost $850 billion.
More than 70% of that value, or $600 billion, went to companies from the United States, with California as the leading hub. European biotech companies raised the second-highest value in funding rounds, or $121 billion, and their Asian counterparts followed with $96.7 billion in total funding.
