VC Funding Only Bright Spot in Depressed Financing Picture

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Following two record fundraising years is a tough act, and 2016 is shaping up to be somewhat anti-climactic. The data in Figure 1 (below) demonstrates just how quickly the environment has changed since the heady days of 2015. CDMOs and CROs need to be concerned about what it implies for demand for their services.

Venture capital fundraising held up pretty well, with money raised per round ($23 million) marginally increasing compared to both 2014 and 2015. We identified 101 funding rounds, down from last year’s figure of 119, but up sharply from the same period in 2014 (77). There was also some evidence that funds are being shared more evenly; the leading 10% of VC-funded companies received 30% of funds, as opposed to close to 45% in the same quarter last year.

However, venture capital only provides a small proportion of overall funding; the public markets supply the overwhelming majority. In the first quarter of 2016, it was clear that the equity markets had lost their appetite for the biopharma sector.

This article is reprinted from the April issue of Biopharmaceutical Outsourcing Report. The full article addresses the importance of last year’s epic fundraising. To learn more, click here.

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Saul is PharmSource’s Director of Market Intelligence. He brings over 15 years of experience in market analysis, having worked in business intelligence roles at Evaluate Pharma, Cardinal Health (now Catalent) and Abbott Laboratories. Prior to that, he was a Post-doctoral fellow in Neuropharmacology at the Universities of Birmingham and Bristol.  Saul holds an MSc (Neuroscience) from the Institute of Psychiatry (King’s College London) and a D.Phil in Neuropharmacology from the University of Oxford.

More posts by Saul Richmond