By David Gross
Slowing down just a bit from Q1's torrid pace, Q2 Biotech VC dropped 13% to just over $10 billion. Much of the reduction was due to a slowdown in activity in Boston, which dropped from $4.7 billion to $3.2 billion in the quarter. Boston's reduction in dollar volume was primarily due to less deal activity, not smaller average deals. The Bay Area actually surpassed Boston's deal count.
Q2 also saw none of the $400 million+ mega-rounds that Q1 did with Insitro, EQRx, and Elevate Bio. The largest deal went to Waltham, MA-based Adagio Therapeutics, which raised $336 million to find a long-term treatment for COVID, with the second largest deal going to San Diego sequencing company Element Biosciences at $276 million.
Deals were also a lot more spread out in Q2 than Q1, the top four markets (Boston, Bay Area, NY/NJ, San Diego) dropped from 82% to 71% of funds raised. Large deals outside the big four included Seattle-based immuno-oncology developer Umoja raising $210 million and Chicago-based Jaguar Gene Therapy raising $139 million.
Heading into the 2nd half of the year, momentum continues to look strong in gene therapy, ag bio, and -omics. Lab rates in the big four markets are surpassing $60/sq foot, ahead of office rents. However, most startups are more concerned with speed than rents. Therefore, the opportunities in university markets and non-traditional big city life sciences markets continue to be centered on talent, capital, or both - but not the cost of lab space.
Q2 2021 Biotech VC