Life sciences VC funding rebounds in 2024. But in Mass., it’s not so rosy.

Life sciences VC funding rebounds in 2024. But in Mass., it’s not so rosy.

Life sciences VC funding rebounds in 2024. But in Mass., it’s not so rosy.


By Hannah Green

Venture capital funding to life sciences companies appears to be rebounding nationally after a few down years, according to new data from Pitchbook and the National Venture Capital Association.

But that’s not the case among Massachusetts life sciences companies. 

Nationally, life sciences companies brought in $19.3 billion in the first six months of 2024. Last year, biotech companies raised a total $30.6 billion over 12 months, meaning the U.S. life sciences industry is on track to exceed that figure in 2024.

Fundraising hit a high of $54.5 billion in 2021 and has been declining ever since, with $40.9 billion raised in 2022. Prior to the Covid-19 pandemic, a period when life sciences companies saw a rush of interest and capital infusion, funding had been increasing more steadily and was $27.1 billion in 2019.

The local view

Capital hasn’t been flowing as furiously to Massachusetts life sciences companies in 2024, according to Pitchbook/NVCA data. Biotech companies raised $2.64 billion in the first half of 2024. Last year, in total, companies brought in $8.48 billion.

A few of the largest rounds raised by Massachusetts companies so far this year were by life sciences companies, including Zenas BioPharma and Diagonal Therapeutics. Nexamp, a clean energy company, snagged the top spot with its $520 million raise.

Initial public offerings have started to return in Massachusetts. Burlington-based Fractyl Health raised $110 million in its IPO in January. Boston’s Rapport Therapeutics Inc. closed its $174 million IPO in June.

But the two companies have had differing post-IPO trajectories. As of July 30, Rapport’s stock price was up over 9% since it hit the public markets, while Fractyl’s stock was down over y0% as of the same date. 

Massachusetts M&A activity is also low compared to the $40 billion in deal value seen in 2023. So far this year, M&A activity for Massachusetts biotechs hit $10.3 billion. That’s in line to hit the deal value in previous years, including $13.8 billion in 2022 or $25.7 billion in 2021.

Nationally, life sciences M&A deals were worth $47.87 halfway through 2024 and $165.88 billion in 2023.

Challenges still ahead

While national data appears to be promising for the life sciences industry, Pitchbook isn’t wholly optimistic about the state of venture capital funding. 

Nizar Tarhuni, VP of institutional research and editorial at PitchBook, said “VCs are increasingly turning to alternative liquidity options to combat the sluggish exit environment and many are pulling back from fundraising altogether.”

The total amount of venture capital invested in Massachusetts companies in the first quarter of 2024 was $3.34 billion and $3.5 billion in the second quarter. The last time VC funding was below these amounts in Massachusetts was the fourth quarter of 2019.

Massachusetts VC funds have raised a little over $2 billion so far this year. In 2023 they brought in a total of $5.4 billion. Prior to 2023, Bay State-based venture firms have brought in far more than that amount each year since 2018, when they raised $5.6 billion.

“Managers that have been unable to provide distributions to LPs or a lengthy track record of performance are struggling to raise new funds as LPs closely examine underlying assets of their portfolios, and are considering putting dollars to work in other strategies like buyouts and credit,” Tarhuni added. “Given the factors at play, this market will likely continue to be challenging for VC fundraising, and, in turn, startups looking to raise capital.”

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