Venture Capital levels into Life Sciences hit record high

The Life Sciences industry is experiencing record levels of investment across both businesses and associated real estate, with the pandemic having highlighted both the sector’s importance and its resilience as an asset class.

Global venture capital, a key driver of Life Science company growth, has been rising rapidly throughout 2021, already surpassing 2019’s $63.3bn as a whole. This growth is set to continue, with no signs of slowing, as much of the capital raised by investors is yet to be deployed.

In Europe, the UK is by far the dominant market accounting for over double the venture capital raised in Germany, the second largest European market. In the UK, record levels of venture capital has been raised over the past 3 months, with £1.9bn raised between 1 June and 26 August 2021, an astonishing volume of investment that puts the UK total to £4.25bn ($5.787 bn) in 2021 YTD, up from £2.8bn in 2020.

The US market leads the way globally, with a total c$56bn of venture capital raised in 2021. This compares to China with $16bn, followed by Europe with $12.3bn.

The Summer spike in venture capital in the UK has been driven by extremely large raises. Seven funding rounds in the UK this year were greater than £50m, with all but one company based in the Golden Triangle Life Sciences cluster of Cambridge, Oxford and London. These include:

• CMR surgical, based in Cambridge, is a Medtech company developing surgical robotics and raised £425m in Series D funding in June 2021  
• Oxford Nanopore Technologies, based in Oxford, is developing portable high-throughput sequencing devices and raised £202m in August 2021
• Quanta Dialysis Technologies, a dialysis device company based near Birmingham, raised £176m in Series D funding in June 2021

Several of the large funding rounds have been later stage venture capital raises, which is in line with consistent increases in total later stage venture capital investments year on year since 2015, a CAGR of 20.7%.

In parallel, the number of Initial Public Offerings in 2021 have also increased, raising £4.5bn in the year to date, up from £1.7bn in 2020.

In response to this venture capital activity, there is a requirement for developers and investors active in the Life Sciences space to deliver space for the immediate needs of these growth companies, with the longer-term need for office and lab infrastructure showing no signs of fading.

Chris Walters, Head of UK Life Sciences, JLL, said: “The UK Life Science industry has seen unprecedented levels of venture capital investment during the Summer period, which is set to continue and will likely increase the already high demand on appropriate real estate stock. The UK has a strong development pipeline, but despite this prominent investment, and activity, locations such as Cambridge are currently experiencing no available lab stock, and so the question remains around whether supply can keep up with demand. Those that act quick to invest and develop space, will likely see the highest rewards”.