Olivia Schwern - Associate @ J.P. Morgan | Life Sciences Private Capital
Our take from Q3, in short:
- Attracting new LP capital is still a feat. According to Carta, less than 10% of 2021 private funds have returned any capital to their LPs after three years, limiting allocators' ability to assess new opportunities.
- Healthcare has been a consistent bright spot. Over 1-in-4 LP dollars deployed into VC in 2024 have gone into healthcare-focused funds – the highest share in over five years.
- This dynamic has led to a revival in deal activity. If the current pace holds, private healthcare companies will raise ~$70 billion in 2024, an impressive >40% pickup from last year.
- Valuations continued to find support. We still believe life sciences investors today are more likely to get into quality companies at attractive prices relative to recent years.
- Finally, the healthcare exit market is staging a comeback. Q3 saw 97 VC-backed companies exit – 18 via IPO, 79 via M&A.
CAPITAL FLOWS
Q3 2024 data affirms: In the face of still-elevated interest rates, uncertainty ahead of the U.S. presidential election and heightened geopolitical tensions, allocators still have faith in top-tier managers to deliver long-term investment returns.
The first three quarters of 2024 saw nearly $200 billion flow to global VC managers. If this pace holds, venture funds will bring in over $260 billion this year, numbers roughly in-line with last year.
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