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Sunday, Sep 25, 2022

Life Science Funding Shows Increase in Most Rounds

Financing rounds since 2013 have grown larger in San Diego life sciences.

A look at annual median deal size shows an increase, from early-stage seed financing to Series A, C and D rounds. Only Series B rounds have remained flat in recent years.

One biotech watcher said fatter seed and angel financings seem to be driving up subsequent rounds.

“It’s just pushing the whole continuum, it appears,” said David Crean, a managing director at Objective Capital Partners. The firm compiled the data.

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Crean said biotechs are aggressively vying for larger seed or angel rounds, which ensures enough cash to get to a critical stage, like a proof of concept study or application to begin human trials.

The median seed financing in San Diego life sciences this year: $3 million, nearly double that of 2013.

“You can certainly raise $1.5 or $2 million, but if it’s not going to get you to a value inflection point, you’re going to be back out on the street doing it again,” Crean said.

In return for more money early on, Crean said these startups likely give up a larger stake. To come up with the funds, angel investors are pooling together, he said.

The next step: a Series A round. The median Series A financing this year: $12.5 million, a 205 percent increase from 2013. However, deal volume fell compared with three years ago.

That could be because investors are pursuing fewer though ideally higher quality deals, a national trend that venture source Pitchbook has covered.

Crean said a greater number of San Diego biotechs marching toward initial public offerings could explain the rise in median Series C and D rounds.

He mentioned another factor in rounds going up: limited partners — investors in venture capital funds — are putting pressure on general partners to spend idle cash.


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