We are into the fourth quarter and I am very late in reporting on second quarter activity. From a big picture, the industry is kind of chugging along, continuing to make investments, with some pickup in exit opportunities thus far in 2025. There is a lot of uncertainty out there, in terms of tariffs and visa fees and drug policies, etc. Since 2022 initial public offerings of venture-backed companies have been very low. The number did not pick up much thus far in 2025, with about ten in each of the first two quarters, but the average IPO size and total value has increased, although companies are going public at lower values than their peak private round represented. Exits are really important, because they return capital to the underlying investors, who then will hopefully put it into new venture capital and private equity funds. (NVCA Report)
The number of funding rounds was down both from the first quarter and from the second quarter of 2024. Total deal value dropped from the first quarter of 2025 but was up significantly year-over-year. Unfortunately a lot of the money is going to already well-funded companies in later rounds and less to support true start-ups. As you might imagine, anything that touches artificial intelligence is attracting funding. Average deal size and number of rounds are creeping up a bit. The San Francisco area, Boston and Los Angeles are the top areas for receipt of funding.
Health care is relatively weak, reflecting concerns about the future for advanced therapies. More traditional health care services and health technology are doing better than pharmaceutical and biotech companies. There are fewer funding rounds, with already growing, profitable companies getting a disproportionate share of the funding. Third quarter figures will be out shortly and I would anticipate a similar trend.
