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Life Sciences Venture CapitalLast year can be summarized as a very good investment year for businesses in the life sciences field. Venture capitalists all over the world were thrilled to invest in this field of activity even though the general amount of investment in this segment tends to be higher than in most cases.
2010 has brought an amount of nearly $7 billion venture capital investments in life sciences in the U.S., a 3% increase over the amount in 2009. The average deal size was around $11.9 million, 6.3% less than in 2009, showing a possible shift of interest towards a greater number of earlier stage deals. Even though this tendency of encouraging start-up companies researching life sciences, the great amount of investments needed and the long incubation period may be the reasons why venture capitalists seem to have lost a little of their interest in this field. The market may have been perceived as still ascendant, but the latest venture capital reports show that the life sciences no longer represent a priority for investments in 2011; its place has been taken by the digital media market.
The forecast announcing that life sciences may no longer be on an ascendant trajectory has been provided by the National Venture Capital Association in Philadelphia. They have announced that, since the Food and Drug Administration is no longer approving as many drugs as in the past and as the research stage for creating new drugs is so expensive, venture capitalists are to show less interest in this market. Another worry is that the few life science companies that went public in 2010 have seen their share prices decrease incredibly, up to the point of not being profitable anymore. Investors no longer have confidence in the strategy applied last year; that of investing smaller amounts in start-up companies. The situation in Philadelphia has chances of spreading all over the world although experts have announced that the situation in 2011 will not be dramatically modified worldwide, although the tendency of the market is of going down.