by Rowan Walrath / via The Boston Business Journal
For the second straight year, the amount of venture capital that was poured into Massachusetts-based life sciences companies has eclipsed all previous fundraising records, ringing in at $13.66 billion in 2021.
According to a report from the Massachusetts Biotechnology Council, an industry group better known as MassBio, local biopharma companies accounted for 36% of all life sciences investments in the U.S., with more than 200 companies bringing in capital across some 250 rounds.
The $13.66 billion represents growth of 70% over 2020, when local firms collectively raised $8 billion.
While some of the largest venture capital rounds last year belonged to mature biotechs, many were brought in by very young startups. Flagship Pioneering-backed RNA startup Laronde, for instance, raised its $440 million Series B round just three months after launching publicly. Laronde has yet to disclose a lead program, a timeline or any disease areas. Neurology startup Neumora Therapeutics raised $400 million in venture capital, plus a $100 million investment from Amgen Inc., as a Series A round disclosed in October.
Valuations are high, too, nearing $2 billion in the cases of biotech startups EQRx and ElevateBio, which commanded the highest two fundraises of last year. Investors have warned that valuations like that, as well as high valuations in the public markets, “have to make sense” — otherwise, the biotech industry could risk bubbling to the point of bursting.
MassBio CEO Joe Boncore, who joined the organization late last year after serving as a state senator, is not concerned about the sky-high valuations. He also believes that 2022 is on track to be yet another record year for biotech investment in the Bay State.
“I think all signs really do point to another strong year for venture capital firms,” Boncore told the Business Journal. “In the short term, I think this level of investment is sustainable.”
In any case, enormous venture capital rounds continue to roll in. January alone has seen fundraising announcements of $140 million, for virus-fighting nasal sprays; $150 million, for machine learning-driven diagnostics; $115 million, for next-generation gene editing; and $116 million, for RNA-editing drugs. That’s more than half a billion dollars for just four companies, in just the first four weeks of the year.
Fundraising is beginning to take place outside of Kendall Square. While Cambridge still has an outsize influence on the industry — 58% of companies that received venture funding in 2021 were based there — growing hubs like Waltham and Watertown are on the rise, as companies leave in search of more, and cheaper, lab space.
That holds true for public companies, too, according to MassBio’s report: 54% of Massachusetts-based biopharma companies that went public via IPO last year were based outside of Cambridge.
Overall, 25 Massachusetts-based biopharma companies raised a total of $3.8 billion in initial public offerings in 2021.
“The injection of capital is going to lead to more sustained investment in the ecosystem that is around the Commonwealth, and I think that’s good for the Massachusetts economy,” Boncore said.