Healthcare venture capital investment hits five-quarter high (MedCityNews)
Healthcare venture investing reached its highest level in five quarters, with signs of a resurgence in early stage investing.
Healthcare companies received $1.9 billion in investment during the second quarter, up 21 percent from the prior quarter and up 16 percent from the like quarter last year, according to a report from New York research firm CB Insights. There were 147 venture-backed healthcare deals in the quarter.
The quarter’s largest healthcare deals included: California-based defibrillator company Cameron Health($107 million), Massachusetts-based cancer drug developer Tesaro ($101 million) and Massachusetts-based osteoporosis drug developer Radius ($91 million).
Seed investments accounted for 5 percent of the total, up from 1 percent in the first quarter. Despite, the uptick in early stage deals, CB Insights’ CEO Anand Sanwal said the increased health venture activity came primarily from deals involving more mature companies.
“The uptick in the funding trend was driven primarily by a handful of larger mid- and later-stage healthcare deals,” Sanwal said. “On a quarter-over-quarter basis, Q2’11 also saw 6 percent more deals than the year-ago quarter. However, the consecutive three-quarter decline of healthcare deals is something we are watching.”
When it came to the destination for those health venture dollars, the rich got richer. California and Massachusetts dominated, with California-based companies pulling 46 percent of the venture dollars in the quarter and Massachusetts companies at 31 percent. Only Illinois companies, at 3 percent, topped more than 2 percent of the overall amount among states. California’s and Massachusetts’ 77 percent of the overall healthcare dollars exceeded the two states’ combined 64 percent share last quarter.
Overall, things are looking up for the venture capital industry. The $7.6 billion in investment and 768 deals in the quarter both represented nine-quarter highs. Dollars jumped 54 percent while deals increased 25 percent from the second quarter of 2010.