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Life sciences venture deals down in third quarter

on November 16, 2011 Source:

In the third quarter, the number of venture capital life sciences deals fell to its lowest level since the first quarter of 2009, according to the latest MoneyTree report.

The 170 life sciences deals in the third quarter represented a 21 percent drop compared with the prior quarter, according to the report from PricewaterhouseCoopers (PwC) and the National Venture Capital Association. Quarter-over-quarter dollars invested fell, too, down 18 percent from the second quarter.

Venture capitalists blame an uncertain regulatory environment and poor exit prospects for the decline in life sciences investments, according to Tracy Lefteroff, global managing partner of the venture capital practice with PwC.

“When investors see a lack of exits for their companies, it depresses their appetite for funding on the front end,” Lefteroff said.

However, the numbers look more positive when viewed as a year-over-year comparison: Dollars invested in life sciences companies increased 22 percent by that measure.

The two life sciences trends — quarter-over-quarter declines, but year-over-year gains — were mirrored by the venture capital industry as a whole, according to the report.

First-time funding for life sciences also dropped, with 21 companies receiving first-time venture funding in the third quarter, down 54 percent compared with the prior quarter.

“Investors are weighing the risk and time involved in funding companies that had not previously received venture capital but are still willing to invest in what they see as game-changing technology,” Lefteroff said.

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