San Francisco Bay Area Leads the Nation in 2016 Biomedical Investments
Feb 01, 2017
The San Francisco Bay Area is the place to be for the biomedical industry as evidenced by the large share of investment capital and deals going to Bay Area biopharmaceutical, medical device, and diagnostic companies.
Silicon Valley Bank (SVB) recently released an informative report highlighting how the San Francisco Bay Area is the leading location for investment in the biomedical industry. SVB’s report outlines biomedical industry investment trends in the U.S. and across the world.
In 2016, California, and the SF Bay Area in particular, was the leading location for biotechnology and pharmaceutical investment with 63 deals and over $2.2 billion. Seven of the top 20 biotechnology and pharmaceutical investors were corporations, and the majority of investment was focused on oncology.
There are over 600 biotechnology and pharmaceutical companies in the SF Bay Area, with the largest concentration in South San Francisco. Only the top 10 percent of these companies have more than 25 employees, so the majority of these industry sectors is made up of small, entrepreneurial ventures, most high risk, but many with innovative, high-potential technologies. In 2017, SVB projects that the biotechnology and pharmaceutical sectors will keep up with the accelerated pace of overall venture investing that occurred between 2013 and 2016.
The SF Bay Area has over 700 medical technology (devices and equipment) companies, with the largest number of companies based in Fremont, San Jose, and Sunnyvale. Most of these companies are small and have new, untested, but often innovative technology. In 2016, the SF Bay Area was a top location for investment in medical devices with 37 deals totaling $1 billion, and diagnostics, with 26 deals, totaling over $1.5 billion.
The most active medical device and diagnostic tool investors grew more diverse − corporate venture, angel groups, incubators and accelerators, and private equity − all seeking to fill the void left by traditional healthcare venture funds. University and lab research, corporate innovation, and incubator/accelerator programs, such as IndieBio in San Francisco and the UCSF QB3 Rosenman Institute, have spurred these investment opportunities. Looking ahead to the next two years, SVB expects investments in medical technology companies to level off at $10.5–$11 billion annually through a combination of venture, corporate, and other investors.
The SF Bay Area is likely to remain the most attractive biomedical region in the world because of the resources available for entrepreneurial ventures, but also because of the region’s access to cutting edge innovation in related and supporting industries that are also emerging. Disruptive emerging industries and technologies such as artificial intelligence, robotics, block chains, augmented reality, and the Internet of Things, are centered in the SF Bay Area. More and more start-ups and investment opportunities involve the integration of the biomedical industry and these emerging industries. Regional resources and integration opportunities with other cutting edge industries will continue to make the SF Bay Area the place to be for the biomedical industry.
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