Initial rounds of VC financing totaled $7.7 billion over 137 deals for biopharma in 2024, compared to $3.8 billion over 156 deals in 2023.
The megaround ruled first-financings in biopharma last year, with seven rounds over $300 million pushing the overall total raised to double 2023’s numbers, according to a new report from HSBC Innovation Banking. But fewer biotechs reaped the benefits of venture capital.
The report looked at first-time financings for biopharma, which totaled $7.7 billion over 137 deals. This includes AI company Xaira Therapeutics, which emerged with a whopping $1 billion in the second quarter. 2023 saw $3.8 billion over 156 deals.
The first half saw 73 total financings, compared to 63 in the second half. Xaira was one of 14 megarounds of $100 million or more that landed in the first half, which saw the bulk of venture activity—totaling $4.2 billion, according to HSBC. This amount represents 72% of all first-financings that occurred in the first half. There was no real trend in terms of company stage, with the dollars spread across preclinical, Phase I, II and III.
In the second half, there were only six first financings that pushed above $100 million. HSBC noted that there were also five series A financings that went above the megaround mark. While they didn’t fit neatly into the analysis, the raises were notable as they followed earlier large seed rounds and raised a collective $650 million.
Many of these financings saw well-known management teams at the helm, fresh out of previous companies that got scooped up in successful M&As, HSBC said. These executives arrived back on the biotech creation scene with a blank check, the firm said.
And even if these megaround raisers fail in their initial stated mission, HSBC says investors who go that big up front are likely to continue supporting the experienced team to find something new to do.
“The largest syndicated deals often feature experienced management teams with a track record of success that demand substantial equity rounds,” HSBC wrote. “This allows flexibility to pivot if the initial technology fails, with continued insider support. In such cases, investors are more likely to provide additional funding rather than accept a write-off.”
Experienced executives featured prominently in BioSpace’s NextGen Class of 2025, such as Seaport Therapeutics and Exsilio Therapeutics.
It makes sense to raise a lot of money for complex technology, HSBC said. But the surge in megarounds is risky given the restrained exit market, as M&A and IPOs have been slow. But the firm noted that later financings saw a surge of crossover interest, meaning these investors are positioning for large M&A or IPO activity.
Another stand out that HSBC flagged was out-licensing deals from Chinese biotechs, such as metabolic-focused Kailera Therapeutics, which emerged in October with $400 million.
The most active VC investors in 2024 were Novo Holdings and Frazier Life Sciences. Arch Venture Partners, which was behind Xaira, was tied for third with Forbion Ventures. Bristol Myers Squibb, Sanofi, Eli Lilly and Merck were among the busiest pharma investors.
