Healthcare startup investments spike at $10.5 billion in 2015, expected to dip slightly

Investments in new healthcare startups have risen sharply since 2010, according to new research from the Silicon Valley Bank Healthcare Investments and Exits Mid-Year Report. While there was just over $7.5 billion invested and raised in venture capital in 2010, between then and 2015 it spiked to around $10.5 billion.

With healthy funding over that time, the study's authors see that strong investment continuing over at least the next two years. Based on data from the first quarter of this year, it's expected that investment in new companies may reach as high as $9.5 billion by year's end.

That's actually down slightly from last year, reflecting less crossover activity. Fundraising during the first half of 2016 was down compared to the same period last year, driven primarily by the closing of three big funds totalling $2.75 billion. But there continues to be limited partner interest in healthcare investment.

[Also: Health IT sees $1.4 billion in investments, merger activity in first quarter, Mercom says]

Series A funding for startups, on the other hand, is up in all sectors so far this year. Biopharma alone is on pace for over 100 series A deals, with $2 billion in invested capital -- up 30 percent over 2015. If investment velocity continues, that would be a record high. Much of this activity has focused on pre-clinical outfits such as oncology, neurology and orphan/rare disease companies.

Device deals have already eclipsed 2015 totals, with significant investment activity in neurology, cardiovascular and surgical companies.

Biopharma deal sizes have increased. The median investment round size for most active investors has increased more than 40 percent over 2015, and the median deal size has almost tripled since 2013. Oncology is leading the charge in new biopharma investments; from 2015 through the first half of this year, there have been 62 deals representing around $2.4 billion. 

Twitter: @JELagasse