The 50 most active biotech VC funds in 2017

With money flowing fast into the coffers of biotech venture funds, it’s easy for cash-hungry companies to imagine VCs are always on the prowl for promising bets. But new data suggest some investors are far more likely to gamble on newcomers than others.

Jonathan Norris

Jonathan Norris, the guy who puts together Silicon Valley Bank’s bi-annual and annual VC reports, noticed our own list of 100 VCs in biopharma didn’t tell the whole story. While VCs are making several investments per year, lots of those funds are chipping in additional cash to their portfolio company’s follow-on rounds. They’re doubling down on existing bets rather than seeking new deals. So Norris looked at his own data from 2017, took out all follow-on investments, and just looked at deals in which VCs were making first-time investments in companies.

“Most everyone investing in the sector is saying they’re interested in hearing from entrepreneurial companies, but I think its hard to know which ones are actually making new investments,” Norris tells me. “Folks may be actively investing, but maybe they’re only making one investment per year. Are you going to be that investment?”

You won’t be surprised to find OrbiMed, Novo, and ARCH Venture Partners at the top, but Norris did note a few interesting findings. GV (formerly Google Ventures) surprised him by landing at number 7 out of 50 of this year’s most active investors.

“I thought (GV) was doing more on the tools side with big data, AI, and analytics – and that makes a lot of sense,” Norris said. “But we’ve seen them jump onto the scene on the therapeutics side, and I think that’s fascinating.”

This data also shows the dominant role corporate funds played in 2017, making up 22% of our list of most active investors. Norris said corporate money has seen a significant rise since 2013, ranking “higher and higher” on his list each year. As large pharmaceutical companies increasingly depend on smaller ventures to fill their R&D pipelines, these deep-pocketed investors are not to be ignored.

“A lot of people discount the corporates,” Norris said. “But these folks are aggressive in the market and they’re not just doing follow-ons. A lot of these folks will do deals on their own. They’re attractive sources of capital, and I think people forget that sometimes. You’d be remiss if you’re not engaging with them.”

One group of investors that appear to be slowing their interest in biopharma are the crossover investors, Norris said. Since the peak of their interest in Q3 2015, these institutional investors (who largely play in the public markets) have seemingly cooled towards life sciences.

Asthika Goonewardene

Bloomberg Intelligence (Bloomberg’s research arm) does in-depth analysis of companies and industries, and senior biotech analyst Asthika Goonewardene said his team has also noticed this trend.

“We’ve heard that one as well on crossover side,” Goonewardene said. “I wouldn’t say it’s drying up, but interest does seem to have diminished quite a bit.”

Norris and Goonewardene both shared more interesting data on investing trends throughout 2017, and what they expect to see next year — but we couldn’t squeeze it all into one report. You’ll be seeing at least one more Endpoints report from these findings down the road.

I’m sure we’ll also be chatting about these trends at this year’s Biotech Showcase during JPM week (January 8-10, 2018), where I’ll be joining a panel of biotech journalists to discuss what we’ve heard around the square. We’ll be chatting finance trends and more on the last day, January 10, at the Hilton San Francisco Union Square at 4:30 pm. See you there.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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