While last year’s boom in corporate venture capital financing continues to expand in some business sectors, the healthcare space raised only $288 million in 23 deals in the first quarter of 2014—the lowest in five quarters.
A survey of first quarter venture capital (VC) investments by CB Insights showed a continuing trend of big companies with deep pockets making sizeable late-stage financing investments. Known as corporate venture capitalists, led by Google Ventures and Intel Capita, they invested a total of $3 billion in the first quarter, 30% of all VC investment, which totaled $9.92 billion in 880 deals.
Lilly Ventures, the investment arm of Eli Lilly, and SR One, GlaxoSmithKline’s corporate VC fund, led corporate venture investing in healthcare. While 36% of corporate VC investments were in internet companies, 18% were in healthcare, the second largest sector. Still, first quarter corporate investments in healthcare were nearly $100 million less than the year-ago quarter, when $380 million was invested.
Of the 23 corporate VC deals in the first quarter, the top three were:
The report also highlighted the record number of U.S. initial public offerings during the first quarter—35 VC-backed companies, the highest since the third quarter of 2000. Of the 35 IPOs, 22 were in the healthcare sector, compared to four in the year-ago quarter. The remaining 13 VC-backed IPOs were technology companies.
“Healthcare remains a conundrum, with great IPO activity but more than a dip in venture financing compared to a year ago,” said Anand Sanwal, CEO of CB Insights. “It’s hard to put my finger on why it is happening, as there is an overall shift to technology investments. Still, IPOs are a better indicator of the healthcare space.”