Life Sciences Venture Investing Represents 7th Best Quarter On Record, But All Is Not Blue Skies

Several weeks ago we reported that life sciences investing rose 37% from the first to the second quarters. Here are some additional details, courtesy of PricewaterhouseCoopers:

First, with venture capitalists earmarking $2.1 billion for 206 companies, the quarter was the seventh best on record since the MoneyTree Report began collecting data in 1995. The MoneyTree report is compiled by PwC, the National Venture Capital Association and Thomson Reuters, the publisher of this blog.

Behind the rise is the increase in startup exit activity over the past year.

But all is not blue skies. Investments were up compared with the first quarter, but not compared with last year. In the year-over-year comparison, dollars were down 3% and deals fell an even greater 21%. That brought the life sciences share of total venture down to 28% compared with 30% a year ago, PwC reports.

During the quarter, biotechnology funding declined 9% while medical devices allocations rose 9% from last year. Medical devices deal making hit a peak not seen since 2008, PricewaterhouseCoopers found.

First-time fundings fell 27% as 44 life sciences companies received money for the first time. The average first time deal rose 36% to $6.4 million as investors gave companies a longer time to mature.

Two of seven segments of the biotech industry saw growth in the quarter. Investments in biotech research rose 216% and in biotech equipment climbed 197%. Human biotechnology was the largest investment category with $819 million allocated.

Two slices of the medical devices category fell: medical/health products investing sank 57% and medical diagnostics funding tumbled 7%. Dollars allocated to medical therapeutics jumped 33% and accounted for more than three-fourths of the money spent.

The San Francisco and Boston areas accounted for the majority of life sciences spending.