Sharp declines in US biotech stock indices gave equity investors a nervous start to the year, but life has been much more comfortable for backers of private companies. Young drug developers raised $7.1bn in venture cash in the opening months of 2021, a sum that smashes previous records by a considerable margin.
A handful of monster rounds helped drive the topline number higher with two companies, Elevatebio and EQRx, accounting for more than $1bn of the cash raised. The quarter also saw a dramatic acceleration in the concentration of capital into fewer but better-funded start-ups; while the number of financings fell to at least a five-year low, both the mean and median amounts surged to new highs.
This focusing of funds is not a new trend, but the chart below shows just how dramatic the swing has been this year. The mean amount raised per round reached $84.4m in the first quarter, more than double that seen in the same period in 2020, while the median more than tripled.
The below analyses are based on Evaluate Pharma’s venture financing data, with a specific focus on drug developers. Money raised by companies working in associated fields like medical devices, diagnostics or pharmaceutical services has been excluded, to help identify trends specific to those developing human therapeutics.