Indiana’s health care and life sciences sector sees VC funding drop 54% in 2023

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Indiana’s health care and life sciences sector, often hailed as a key driver of the state’s economy, saw venture funding fall by 54% last year, in line with a sharp downturn in VC funding nationwide.

Thirty-four Indiana companies landed $287 million in venture capital in 2023 to help finance a wide array of technologies, from medical isotopes to stem-cell therapies, according to BioCrossroads, an Indianapolis-based group that promotes and invests in the state’s life sciences sector and tracks the funding.

That compares to $619.8 million in venture funding for 37 companies in 2022, which was a record amount.

Venture capital is a critical source of funding for early-stage and mid-stage companies that are too young or too untested to go public or merge with a larger company. It’s seen as a key indicator of a sector’s health and potential growth.

Earlier this month, BioCrossroads released a report that said Indiana’s pharmaceutical and medical device sectors are starting to lag the nation in growth and market share and will require a focused effort to stay competitive.

The falloff in venture funding seems to be in line across a wide array of industries in Indiana and nationwide.

Nationally, the number of venture deals dropped 23% last year, and the value of those deals dropped 30%, to $170.6 billion, according to PitchBook, a Seattle-based company that tracks venture capital, private equity and mergers and acquisitions.

Indiana life science companies signed 34 venture deals last year, for an average deal amount of $8.5 million. That’s down sharply from the year before, when companies signed 40 deals worth an average amount of $15.5 million.

In addition to the biotech and pharmaceutical companies, the sector includes agricultural technology, digital health, medical device, and orthopedics sectors.

Companies often use the venture funds to pay for expensive clinical trials and to develop and test prototypes. Investors give the companies money in exchange for partial ownership in the growing companies.

Last year’s deal sizes ranged from $20,000 to $116 million. Four companies accounted for the lion’s share of the funding, $252.3 million. The other 30 companies split the remaining $35 million.

The wide range of funding amounts often reflects that some companies are farther along in their research and development and need huge sums to advance their experimental products or services.

Eleven companies made the list two years in a row, showing that investors have ongoing confidence in their progress.

Here is a list of the top 10 Indiana recipients of venture capital funding in 2023:

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2 thoughts on “Indiana’s health care and life sciences sector sees VC funding drop 54% in 2023

  1. Should we be surprised? When will our State and academic leaders get the message that we are failing in every category of healthcare and medical research. Even Biocrossroads has gotten the message. Venture capital investors are NOT going to fund organizations or ideas that do not have serious merit. When it comes to medical research, we have, at best, a second tier research medical school, IU. THERE IS NO WAY OUR STATE CAN SUCCEED WITH ONLY ONE!!! Purdue and Notre Dame have the infrastructure to have its own research medical school. Indiana CTSI would fold, but it does not seem to making must progress anyway. Our legislature has to take this medical education void seriously. Any of the major medical research hubs around the country have multiple medical schools in the general vicinity. Of course, we also need to educate substantially more physicians, both for now and the future as well. MARIAN is working hard to help fill the physician provider gap. (Of course, we need to train a lot more of the other health care workers as well!!) It will need local entrepreneurs to take the lead to develop viable organizations to solve our healthcare challenges.

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