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Biotech VCs Raise Massive War Chests

April 3, 2020

In the midst of the bear market for equities and the shuttered economy due to the coronavirus, venture capitalists have announced raising record amounts of money for biotechnology investments. This is a strong indication that development of novel therapies is gaining momentum and that investors are willing to put significant amounts of capital to work.

ARCH Venture Partners and Flagship Pioneering just announced a record breaking $2.56 billion amassed to invest in innovative biotechnology startups. The ARCH Venture Fund X and the ARCH Venture Fund X Overage raised a combined $1.46 billion, which tops the $1.1 billion the ARCH Venture Fund IX raised in 2016. Flagship announced a new $1.1 billion fund.

ARCH is among the most prolific sponsors of biotechs. Recent biotech IPOs backed by ARCH include Beam Therapeutics (BEAM), Vir Biotechnology (VIR), and Karuna Therapeutics (KRTX). Recent IPO Axcella Health (AXLA) is one of Flagship’s deals.

While biotechs have been one of the most significant areas of the IPO market for several years, the coronavirus has created a new paradigm for telemedicine and highlighted the commercial opportunity of using DNA sequencing to create anti-viral vaccines.

In our 1Q20 US IPO Review, we highlight that strong biotech returns caused healthcare to top the list of best-performing sectors during the first quarter.

This article was first published a day earlier on IPO Pro.

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