Five Years of Growth in Venture Capital Industry

Norwalk, CT - January 14, 2008 - For the fifth year in a row, venture capital funding increased in the health care industry, with more total dollars invested and more deals announced in 2007 than the previous year. Health care companies announced 481 deals totaling $9.7 billion in venture capital last year, achieving an almost 13% increase in funding compared with 2006. Deals were made at a brisk pace, with the number of deals increasing by approximately 4% in both 2006 and 2007. The quarterly and year-end deal and dollar totals for these years are displayed in the chart below.
 

Some of the top venture capital firms in health care in 2006 doubled their investment activity in 2007, including Domain Associates and Alta Partners. Furthermore, in 2006, no venture capital firms announced more than 12 health care deals, while in 2007, 12 firms had 13 or more investments. The top health care venture capital firms for the quarter and the year ended December 31, 2007, based on number of investments, are listed in the chart below.
 

The results of the fourth quarter of 2007 are not quite as impressive as the results for the entire year—but the fourth quarter has historically not been the most active quarter of each year.  During the three months ended December 31, 2007, approximately $2.1 billion of venture capital financing was provided to health care companies in a total of 109 rounds.   In the same period, the median deal size increased to $16 million, up from $11.5 million in Q4:06.  The chart below offers a view of quarterly investment activity for the year, broken down by sector.
 

Zosano Pharma announced the largest venture capital financing of any health care company during the last quarter of 2007, with a $90 million round.  Including that deal, six rounds of $50 million or more apiece were announced during Q4:07, accounting for about 18% of all funding for the period.  The health care services sector produced two of those deals, even though the sector accounted for only a small percentage of the number of deals announced.  Reliant Renal Care and Simplex Diabetic Supply each raised $50 million rounds.  As one might expect, the rest of the largest investments were made in pharmaceutical, medical device and biopharmaceutical companies.