Biotech flotations offer venture funds an accelerating exit

 Venture cash is set to remain plentiful for drug developers this year, and the steady flow of these start-ups onto the highly receptive public markets is showing no sign of abating. This generously lubricated financing cycle is also producing faster exit times: the median time from the establishment of a venture-backed biotech start-up to IPO shrank to a little over five years in 2020, the speediest year in at least the past five. A flotation is not an immediate exit for private investors, of course, although huge enthusiasm for biopharma stocks means that funds are probably able to sell on their holdings pretty easily right now. This facilitates a swifter return of capital to the venture firm’s own limited partners, who are thus happy to invest in the next fundraising – and the cycle continues. It is notable that time to M&A has not markedly quickened over this period, which only reinforces the importance of buoyant equity markets to the venture world’s ongoing boom.

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 Merger and acquisition Median time to exit: 3 127

Note: The analysis above includes only venture-backed drug developers – sectors like medtech or diagnostics are excluded.

https://www.evaluate.com/vantage/articles/news/deals/biotech-flotations-offer-venture-funds-accelerating-exit