Latest news with #BritishPatientCapital
Yahoo
23-05-2025
- Business
- Yahoo
UK biopharma innovator venture financing surges to $1.1bn in Q1 2025
UK biopharmaceutical companies saw a surge in venture financing for innovator drugs in 2024, with double the total deal value from 2022: $827m in 2022 to $1.7bn in 2024. This growth trend appears set to continue, with the total deal value in the first quarter (Q1) of 2025 already reaching a total of $1.1bn - a two-fold increase from $542m raised in Q4 2024, according to leading data and analytics company GlobalData's Pharma Intelligence Center Deals Database. Global biopharmaceutical venture financing reported downturns in 2022 and 2023, but the UK demonstrated resilience with sustained year-over-year (YoY) growth, signalling investor confidence in the UK as a hub of scientific excellence. In 2021, British Patient Capital launched the Life Sciences Investment Programme, a £200m ($269m) initiative that aimed to attract at least £400m in additional venture financing for UK-based life sciences companies. In May 2025, the UK government announced an initiative to boost domestic funding, known as the Mansion House Accord, under which leading pension providers committed to investing 5% of their funds in private UK-based companies, including those in the biotech industry. The Mansion House Accord is anticipated to unlock $25bn of investment for UK businesses by 2030. The venture financing raised in Q1 2025 involving innovator drugs was largely driven by two 'mega-rounds' - Isomorphic Labs with $600m and $411m with Verdiva Bio, highlighting an increase in investor selectivity, concentrating available capital into a smaller number of companies with high commercial potential. Furthermore, US investors were involved in almost the totality of the $1.1bn of the total venture financing deal value raised in Q1 2025 by UK biopharmaceutical companies, compared to UK investors' involvement of only $112.7m. The UK BioIndustry Association raised concerns that a dependency on US capital could prompt companies to relocate to the US and limit the reinvestment of returns into the UK biopharmaceutical sector, weakening its long-term growth. The UK biopharmaceutical industry continues to attract investor interest. However, investor appetite may be impacted following the UK government's decision, announced in March 2025, to increase the Statutory Scheme payment rate for branded medicines from 15.5% to 32.2% for the second half of 2025, with those under the 2024-28 Voluntary Scheme for Branded Medicines Pricing, Access and Growth increased to 22.9% for 2025. An anticipated increase in costs associated with these drug pricing policy changes could deter companies from developing drugs in the UK, which may slow UK-based innovation and reduce patient access to medicines. Sustained growth in venture financing and boosting domestic investment will be critical for translating UK-based innovation into commercial success. "UK biopharma innovator venture financing surges to $1.1bn in Q1 2025" was originally created and published by Pharmaceutical Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
Forbes
29-04-2025
- Business
- Forbes
What's Behind Britain's Growth Funding Gap? A VC View
James Codling, Managing partner at Volution Ventures says VCs can be too stage specific 'We need a holistic approach to investment in the U.K.,' says James Codling. 'It can't remain as an amazing market for Seed and Series A, but with nothing when you get to growth. That just doesn't work.' Codling is the Managing Partner at Volution Ventures, a London-based VC that has just announced the launch of a $100 million fund focused on supporting companies in sectors such as fintech and enterprise software. Created in partnership with Japanese investment company SBI, the fund is intended to play a part in addressing a thorny problem that afflicts the United Kingdom's venture ecosystem - namely, a relative shortage of growth-stage capital. It's a problem ackknowledged by, the British Venture Capital Association in its latest report on U.K. VC finance. As the report points out, U.S. firms raise twice as much capital as their British counterparts, with the gap being much larger at later funding rounds. The BVCA also notes that the dominant presence of overseas investors at later stages is a factor in British startups relocating abroad, just at the point when they begin to generate real value. And even the jump from Series A to Series B can be difficult. Volution cites Dealroom figures suggesting that conversion rates have dropped by 50% in five years. 'The growth journey from Series A onwards is one of the toughest that any founder will ever go on,' says Codling. So why is that the case? Well, at least partly because founders often struggle to meet the expectations of VCs. As Codling points out, once a company moves beyond series A, investors are looking for tangible evidence of execution and delivery. 'Founders get very excited when they raise Series A, but to attract growth finance, they need to be ten to twenty times Xing where they are at Series A," he says. It's not just about revenue growth and profits. Codling says companies need to build out their systems, processes and teams, along with their sales and distribution models if they are to successfully scale the funding ladder. However, there are also structural factors at work. Successive UK governments have taken action to encourage investment in startups, with the tax system playing an important role. Initiatives such as the Enterprise Investment Scheme, British Patient Capital and the regulation of Venture Capital Trusts have all provided tax breaks for investors. This has generally been considered to be a good thing, but it can skew the market. 'These schemes don't really support late-stage investment,' says Codling. And as he sees it, there is a need to encourage support for businesses at every stage. 'The UK is phenomenally good at driving the creation of companies that can access Seed and Series A. But if the funnel isn't bigger, we won't be able to support companies as they grow," he says. This, he says, should be of concern not just to founders but also to the government and citizens alike. If taxpayer money is poured into supporting early-stage companies who struggle to raise the finance they need at a later point in their development, there is a risk that the cash will be wasted. So Codling argues for a more 'holistic' approach to investment on the part of VCs. Rather than seeing themselves as specialising in Seed, Series A, Series B, they should provide funds for good companies throughout their journeys. In other words, they should become less stage-focused. That might be a big ask at a time when VCs are adapting to a market in which valuations have fallen and exits are thin on the ground. So what is giving Volution the confidence to invest across stages with the aim of supporting companies from Seed to growth? Well, there are opportunities. Codling says Volution's approach is to align with the government's emerging 'industrial strategy.' What that is, isn't yet entirely clear, but it is likely to include fintech, AI, defence, energy, biotech and deeptech. These are sectors that will drive growth in the UK while also having the potential for international sales. Currently, the fund favors businesses with revenues between $5 and $20 million, with a current focus on fintech and AI-driven enterprise software. Stepping back to look at policy, Codling says current business support strategies could be better directed. 'There should be more emphasis on venture going towards a long-term growth strategy,' he says. 'Taxpayers' money might be better spent on growth drivers.' By that, he means businesses that could contribute significantly to boosting the U.K.'s flatlining growth. The government is addressing later-stage funding through its Mansion House accord, an agreement with pension funds aimed at directing more institutional money into scaleups. However, Codling says current regulations on fees make it difficult for institutions to align with VCs. The launch of Volution's fund is just part of a bigger and quite complicated picture. While late stage finance is recognised as a problem, figures published by HSBC Innovation Banking and Dealroom suggest that in first quarter of 2025, breakout deals (Series B and C) accounted for the bulk of capital raised ($1.8 billion) while later-stage financing amounted to $1.7 billion. The same report notes that the UK has created 185 unicorns. However, these headline figures can disguise the problems faced by individual companies. Looking forward, the creation of a framework that supports more growth-stage companies remains the next step in the evolution of the U.K.'s innovation economy. .
