Though Overall VC Spending Stumbles and Falls, Private Equity Shines on Biotech

NEW YORK, June 28 - Venture-capital investment in biotech companies in the second quarter grew 44 percent over the same period last year even as overall VC spending was cut in half, according to an audit by a private-equity tracking firm.

Private US-based biotech firms, including genomics tool shops and their customers, will have pocketed a total of $984 million over 62 deals in the period that ends Sunday. The industry earned roughly $680 million over 54 deals during the same period in 2001.

According to the report, released today by VentureWire, total VC investment in US companies for the second quarter 2002 fell to $5.1 billion from $9.8 billion in the year-ago period, a drop of 49 percent. Some 443 companies received funding in the period compared with 850 firms one year ago.

Venture capitalists are still searching for a sustainable level of investment," said John Fuller, managing editor of VentureWire. Several sectors continue to show promise, but a wide-spread recovery has yet to take hold."

One of the areas primed for growth (or at least shielded from the flogging experienced by the broader market) is biotech. According to Fuller, VC financiers are making "opportunistic" investments, "especially in areas like biotech...."

VC firms that have been most active in funding biotech start-ups in the second quarter were Johnson & Johnson Development, which closed seven deals; New Enterprise Associates, also with seven deals; and InterWest Partners, which signed six deals, VentureWire found.