San Diego Business Journal

Local Life Science Firms Received $709M in VC Funding in 2012

Friday, February 8, 2013

San Diego was the second-highest recipient for life sciences venture capital funding – about $709 million was invested in local companies last year, according to a new report from PricewaterhouseCoopers LLP. San Diego is second only to the San Francisco Bay area, which received $1.7 billion.

However, as a whole, U.S. venture capital funding in the life sciences sector dropped 14 percent in dollars and 7 percent in deals in 2012. Venture capitalists invested a total of $6.6 billion nationwide in 779 life sciences deal in 2012, as compared with $7.7 billion for 836 deals in 2011.

And in the fourth quarter, the San Diego investment came in fourth place with venture funding at $142 million – following San Francisco at $588 million, Boston at $278 million and metropolitan New York at $214 million.

“The 2012 investment levels came in lower than what we saw during 2011,” said Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC U.S. in a statement. “The pickup during the third quarter for biotechnology and for both industries during the fourth quarter wasn't enough to outpace lower funding levels during the first half of 2012. Global economic uncertainty, capital intensity, regulatory risk, and more discriminating investors were all potential factors that weighed on sector performance for the year."

Investments in biotechnology companies in 2012 fell 15 percent in dollars while the number of deals was flat, with $4.1 billion going into 466 deals. For the fourth quarter of 2012, $1.3 billion went into 135 biotechnology companies, an increase of 3 percent in dollars and 13 percent in deals from the third quarter when $1.2 billion went into 119 rounds.

Medical device investments fell 13 percent in dollars and 15 percent in deals in 2012, finishing the year with $2.4 billion going into 313 deals. For the fourth quarter, medical devices saw an increase of 32 percent in dollars and 9 percent in deals from Q3 2012 with $581 million going into 74 deals. The life sciences sector accounted for 25 percent of all venture capital dollars invested in 2012 compared with 26 percent in 2011.

The number of life sciences receiving VC funding reached its lowest level since 1995, with only 135 new companies receiving funding in 2012.

— SDBJ Staff Report