More up rounds than down for life sciences startups, as strategics are putting more capital to work these days. That’s the conclusion from the Fenwick & West report on healthcare-focused VC activity.
The report noted that during the first half of this year, large life sciences companies injected capital into the VC funding scene, and perhaps as a result, up rounds out-paced down rounds 53% to 19%, with 28% of fundraisings coming in flat over that timeframe.
But it looks as if a flight to quality is the best explanation for 2012’s first half. For 2012, the increase in up rounds marks a continuation of more up rounds, than down, looking at both 2011 and 2010, the report said.
The report also noted that the $2.5 billion deployed across almost 250 deals in the first half of this year represents a decline in both dollars and volume. Investors are also looking perhaps more toward the late stage, the report noted that ‘first round’ life sci venture financings were off “markedly.”
Series B financings were “noticeably higher” in the second quarter of this year, however.
A grain of salt to take along with the positive figures Fenwick & West reported is that the VC scene has been particularly frothy, with more fundraisings than any year since 2008. The M&A scene slowed—but remember, this is pre-Affordable Care Act approval by the United States Supreme Court, which looks to have kicked off a wave of deals and take-privates in the weeks following the landmark legislation’s final ratification before the nation’s high court. For the second half of 2012, it is likely that numbers the survey called “mixed” will be more like ‘major’—even today, Thoma Bravo’s take-private of Mediware will provide some stock investors with a 40% premium on the healthcare IT company.
IPO activity was more or less in line with 2011’s first half, according to the study. But, again, there were silver linings for even equities investors. The Fenwick survey notes that the Nasdaq Biotech Index and the Nasdaq Healthcare Index both whipped the Nasdaq Composite to kick off 2012.
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