NEW YORK, March 29 - Early-stage biotech companies, including genomic tool and technology firms, are enjoying the best venture-capital market in a decade, according to results of a recent market study.
A greater number of early-stage genomic tool and tech shops worldwide reported VC deals during the first quarter of 2002 compared with the same period one year ago. And, despite an almost universal recession in private-equity investment in the United States, US-based biotech companies saw an increase in VC investment.
A total of 10 international tool and tech companies pocketed $78 million in VC cash during the three-month period ended March 31 compared with seven firms that reported $58.3 million during the same period last year, according VentureWire, whose study is scheduled to be released on April 1.
By comparison, drug-discovery firms closed 36 deals worth $362 million during the last quarter compared with 22 deals that cashed in more than $232 million during the first quarter of 2001, according to the report.
Biotech shops, which accounted for one in four of the roughly 100 early-stage VC investments in the US during the quarter, walked away with a bigger chunk of a significantly slimmer VC pie: A total of 53 companies pocketed roughly $754 million in private equity in the current first quarter compared with $495 million divvied among 32 deals one year ago. The entire VC pot during the quarter amounted to just $5 billion, down significantly from nearly $13 billion one year ago, according to VentureWire.
"Private investment in US-based companies hit its lowest point since the first quarter of 1999," said Ken Anderson, editor of the VentureWire Index report. "With the volatility of the ... [VC industry], it's clear investors are still searching for some stability in the venture capital market."
The biotech sector, especially its start-up firms, appears to be bucking that trend--again.
"VC firms are not making a lot of new company investment. They're still working on their existing portfolio companies," Anderson told GenomeWeb on Friday. "But on the life-science side, there's been a lot more interest and a lot more movement to found new companies.
"New biotech, to some extent," he added, "is being viewed as one of the hot areas, and there have been moves by venture capitals to ... start making some additional investments to deploy some more money to the life sciences.
"For a biotech entrepreneur this is probably the best time in 10m years as far as raising capital," said Anderson. "The question now is did you get the money from people who know what they're doing, who can help you out, who have the connections, who have been there, and who won't bail on you if the biotech bubble starts to subside."