Trends in Healthcare Investments and Exits
Venture Healthcare Investments and Returns Skyrocket
Silicon Valley Bank’s Trends in Healthcare Investments and Exits analyzes the fundraising, investment, M&A and IPO activity of private, venture-backed biopharma, medical device and diagnostic/tools companies. Report author Jon Norris also gives his annual forecast of what’s likely to happen this year.
Healthcare is hot. Rebounding investor confidence is speeding up the fundraising-to-exit cycle and freeing up more capital to invest. For the second consecutive year, the healthcare venture industry produced exceptional IPO and M&A exit activity with accompanying substantial returns. What’s different this year is the growing number of non-VC investors who are flocking to companies preparing to go public, providing “top up” financing and supporting a swell of successful IPOs. As our analysis also shows, capital efficiency is key to positive returns and serves as the underpinning of soaring exit multiples in big exit M&A activity.
Among the findings:
- Healthcare venture fundraising surged 56 percent over 2013, reaching its highest level since 2008, signaling that confidence in the industry is very high.
- Healthcare venture investment grew 30 percent over 2013.
- The number of IPOs more than doubled over an already strong 2013, hitting a 10-year high.
- Potential distributions from VC-backed IPOs and big exit M&A increased 60 percent over 2013.
- SVB predicts the strong fundraising and investment environment to fuel the cycle for another few years, but we expect IPO activity in 2015 to dip slightly.