Corporate Venture Firms Step Up Biotech Funding Amid Industry Slowdown

In a striking shift within the biotechnology startup ecosystem, corporate venture firms have emerged as key players filling the funding gap left by traditional investors. This development comes amid a prolonged slowdown in biotechnology startup funding, offering a lifeline to early-stage companies navigating an increasingly challenging financial landscape.

Corporate Ventures Lead the Charge

According to a recent analysis by BioPharma Dive, venture funds associated with pharmaceutical giants such as Novo Holdings, Eli Lilly, and Sanofi have been among the most active backers of privately held companies in 2025. Novo Holdings has participated in 18 private venture rounds, while Eli Lilly and Sanofi Ventures have each contributed to 13 rounds, positioning them at the forefront of deal activity.

This surge in corporate venture activity represents a significant increase from 2022, when these three entities were involved in a total of just 11 private funding rounds. The upswing has made them the only corporate entities meeting BioPharma Dive's target focus for analysis.

Strategic Advantages of Corporate Backing

Corporate venture arms bring unique advantages to the table, extending beyond mere financial support. Unlike traditional biotech investors, these firms draw capital directly from their parent corporations, allowing for a more stable and long-term investment strategy. This approach has become particularly attractive in an environment where access to capital from traditional venture sources and public markets has become constrained.

Scott Beardsley, a managing partner at Novo Holdings, emphasized the critical role of corporate investors: "There's a significant need for investors like Novo that are deeper-pocketed, that are longer-term focused to play a role in the space. Unfortunately, drug discovery and development hasn't gotten any cheaper. It's gotten more expensive, so the need for capital is more pervasive than ever."

Impact on Startup Success and Exit Strategies

The presence of corporate venture investors appears to correlate with increased chances of successful outcomes for biotech startups. A July report from Silicon Valley Bank found that at least 70% of biopharma initial public offerings since 2022 included at least one corporate venture investor, with all of these stock issuances raising at least $50 million.

Moreover, corporate venture firms backed at least 60% of biotechs acquired during the same period, suggesting that their involvement might "increase the odds of a successful outcome," according to the report's authors.

Balancing Act: Strategic Interests and Startup Autonomy

While the influx of corporate venture capital has been largely beneficial, it also raises questions about the potential influence of pharmaceutical companies on startup trajectories. Some corporate venture arms operate with a "primarily strategic mandate," as noted by Ariana DaCruz, a senior vice president at Stifel's Life Science and Healthcare Venture Banking group. This approach could potentially tie funding to the shifting priorities of parent companies.

However, corporate investors interviewed by BioPharma Dive insist on maintaining a broader directive, focusing on unmet medical needs and science likely to translate into viable drug prospects. Jason Hafler, Sanofi Ventures' managing partner, stated, "Our view is, at this moment in time, this is what biotechs need. They need funds and [corporate VCs] to step in and lead rounds or co-lead rounds."

As the biotechnology sector continues to navigate uncertain waters, the role of corporate venture firms in shaping the future of drug development and startup success remains a critical area to watch.