The stance of venture capital firms in the rising biotech sector

The biotech industry has seen unprecedented growth over the past five years thanks to cutting-edge technological innovations. From drug discovery to mRNA vaccines, biotechnology has significantly evolved and is generating a large influx of venture capitalists all over the world. Moreover, the groundbreaking impact of AI on biology hasn't gone unnoticed. Advances in machine learning and automation have made it possible to create even more error-free and impactful innovations that are being applied in healthcare, crop production and agriculture, and environmental care (e.g. bioremediation, biosensors, etc.).

Bringing a novel concept to a potential breakthrough requires proper funding. The future is slowly shifting towards sustainable biotech solutions, and VCs seem to be more interested in this field. In the upcoming years, AI will continue to become mainstream, and rising biotech startups will surely draw in many more VCs. 

A recent study by Dealroom reveals that venture capitalists have invested approximately $18 billion in European biotech startups in the past four years. According to McKinsey, VC firms have put over $52 billion in therapy-based biotech companies globally between 2019 and 2021.

Expansion of Biotech Sector: The emerging technologies

CRISPR Gene editing: CRISPR-Cas9 gene editing can edit nucleotides and have the potential to cure genetic diseases. According to GlobesNewswire, the gene and CRISPR industry will see an increase from $3.3 billion to $8.8 billion in 2028 at a rate of 21%. As the synthetic biology field evolves, it calls out for more investors for secure funding.

Gene therapies: Gene therapies are revolutionising healthcare and clinical treatment. Viral Vector gene therapies have proven effective in treating Diseases like Hemophilia B, retinal dystrophy, and spinal muscular atrophy. These therapeutic practices are being adopted more by pharma start-ups as the need for better healthcare grows.

Drug discovery: Advances in machine learning enabled the study of the interaction of protein molecules through computer simulations. As a result, more effective drugs can be designed through bioinformatics tools. Biotech companies developing such tools need ample funding. According to a McKinsey analysis, biotech companies developing ML-enabled drug design have received more than $9 billion from 2019 to 2022.

Biotech Industry Trends for 2025

Adjusting investment approach: VCs are prioritising companies closer to clinical trials, typically within 12 months. Across different sub-sectors of the Biotech market, therapeutic and healthcare continue to draw in more venture funding. 

M&A Activity: Biotech M&A Activity in the U.S. has steadily increased, and the return of IPOs indicates a positive outcome for the sector. It is predicted that fiscal policy will shift towards lower interest rates in the second half of 2025, which will be a boon for Biotech VCs.

Better Clinical Trials: Clinical trials and regulation are more time-consuming than drug development. For better efficiency and faster delivery, predictive analysis will become a game-changer in the Biotech industry in the upcoming years. AI will cut down on human errors and lengthy procedures and ultimately pave the way for precision medicine. 

Top European Venture Capital Firms to Look Out for BioTech Startups

Boundary Holding

It is a private, Luxembourg-based deep-tech investment firm founded in 2016. Rajat Khare, the current CEO of Boundary Holding and a notable venture capitalist, has been investing in novel biotech start-ups and fostering innovations through multiple funding options. Having completed his education from IIT Delhi, he has since then garnered global recognition for his eye to identify novel start-ups and smart investment.

Sofinnova Partners

Sofinnova Partners is a French venture capital company which primarily invests in healthcare and biotech. Antoine Papiernik is the current Chairman and Managing Partner of Sofinnova Partners. At its core, Sofinnova believes in the novelties of science and technology and how they can lead to breakthroughs that have the potential to solve critical challenges.

Sunstone Life Science Ventures

It is an independent, Danish venture firm which invests in early-stage life science companies creating effective therapeutics for humans. The current CEO, Hans T. Schambye, holds a PhD in Molecular Pharmacology from Copenhagen University. Having been on the executive boards of multiple BioTech companies, he has an extensive understanding of the industry.

Novo Holdings

It is a private, Denmark-based CV firm established in 1999. Kashim Kutay, the British fund manager, is the current CEO of Novo Holdings. He holds a BSc in Economics and an MSc in Politics of the World Economy, both from the LSE (London School of Economics and Political Science). After working in prominent firms like Morgan Stanley and Sun Group, he joined Novo Holdings in 2016.

Overall, the global market outlook for the Biotech sector is predicted to surge. According to an article by Yahoo finance, the market is projected to expand from $483 billion in 2024 to $546 billion by 2025, with an increased rate of 13%. As more VCs bet on Biotech startups, it is sure that new and efficient solutions will take the biotech world by storm.