Venture capital (VC) firms fund biopharmaceutical research and development (R&D) while incurring substantial financial risk. VC firms seek to invest in clinical areas with the greatest potential for financial return. Using a combination of data for clinical trials and VC investment deals between January 2014 and March 2024, we found that approximately 75% of VC investments were allocated to clinical trials studying small-molecule drugs compared to biologics or gene therapies, without substantial changes over the study period. Most of VC firms’ investment in biopharmaceutical R&D was concentrated in phase 1 and phase 2 clinical trials. This trend has increased in recent years, with phase 1 trials accounting for nearly half of total deals and capital investments in 2023. VC investments were concentrated in several therapeutic areas, including cancer.

So-Yeon Kang, Mingqian Liu, Jeromie Ballreich, Ravi Gupta, Gerard Anderson, Biopharmaceutical pipeline funded by venture capital firms, 2014 to 2024, Health Affairs Scholar, Volume 2, Issue 10, October 2024, qxae124, https://doi.org/10.1093/haschl/qxae124