The Odd Juxtaposition In Biotech Venture Capital

Delivering Returns Amidst Sliding Market Share

By Bruce Booth, Forbes

1024px-DBI_Helix_transBiotech has been one of the hottest sectors in the venture capital asset class over the past few years. Strong IPO and M&A markets have put wind in the sails of the space since 2012, and robust investment activity has enabled a wave of well-funded biotechs to mature with a lower cost of capital than a decade ago.

In addition to helping advance new medicines to patients, this accommodative environment has supported the welcome recycling of capital in the venture world–critical to continued interest of limited partners (LPs) in the space. A recent Silicon Valley Bank report from Jon Norris and his colleagues highlights a staggering level of potential venture capital distributions from the life sciences: they estimate returns of $79B since start of 2012 from both IPOs and M&A events. This far exceeds the capital deployed during that period (~$38B), and far more than the funds raised by life science venture firms. Read more …