Why Biotech Is Quietly Booming in Private Markets

by | Mar 26, 2025

While headlines have largely focused on AI and the chill across public markets, biotech is quietly having a moment — just not where most people are looking. Despite the continued freeze in IPO activity, venture capital is still flowing into biotech startups, especially those building platform technologies with long-term scientific promise.

In Q1 2025 alone, over a dozen biotech startups raised rounds of $100 million or more, signaling strong investor conviction even in the face of macroeconomic uncertainty. This reflects a broader shift in biotech investing: away from short-term exits and toward foundational science and multi-asset platforms.

According to BioPharma Dive, total biotech funding was down from the 2021 peak, but the average deal size is up, and investors are concentrating capital into fewer, more robust bets.

Why It’s Happening: IPO Winter Meets Scientific Spring

Biotech IPOs are still largely frozen — just 8 companies went public in 2024, a steep drop from the 100+ in 2021. Valuations have corrected, investor enthusiasm on the public side is muted, and crossover funds have pulled back. And yet, venture dollars haven’t disappeared — they’ve just become more strategic. In many ways, this is a healthy reset. The frothy go-public-at-all-costs mentality of 2020–2021 led to weak fundamentals and bloated cap tables. Today’s biotech companies are being built with more discipline, deeper pipelines, and longer runways — often raising $100M+ rounds before even considering commercial pathways.

Who’s Raising Megarounds: A Closer Look

Here are a few startups that have landed megadeals in early 2025:

  • Tessera Therapeutics — Raised $300M+ to expand its gene writing platform, which allows for precise, durable edits without double-strand breaks. Tessera’s tech holds promise across multiple disease areas, including rare diseases and oncology.

  • Generate Biomedicines — Backed by Flagship Pioneering, Generate raised another $273M this quarter to advance its AI-powered protein design platform, targeting both internal pipeline assets and partnered programs with big pharma.

  • ReNAgade Therapeutics — Secured $160M for its RNA delivery platform, positioning itself at the intersection of next-gen gene therapy and targeted delivery systems.

  • Upstream Bio — Focused on allergic and inflammatory diseases, Upstream raised $200M+, leveraging a mid-stage clinical pipeline and strong data readouts.

These rounds reflect a preference for platform companies with broad applicability, not single-asset biotech plays. In many cases, these startups are developing multiple therapeutic programs simultaneously — a more capital-intensive but diversified strategy.

What This Means for VCs and Founders

For VCs, the message is clear: even without IPO liquidity, biotech remains a high-conviction asset class — especially in private markets where patient capital can support longer timelines. But this new wave requires:

  • Scientific rigor and depth of pipeline

  • Robust IP strategies

  • Capital-efficient platform development

For founders, the takeaway is equally clear: it’s not enough to have a breakthrough molecule. What investors want is a system — a platform, a modality, a repeatable engine of discovery.

The Road Ahead: Fewer Bets, Bigger Impact

As biotech matures post-COVID hype and public markets stay tight, venture investing is consolidating around fewer, higher-quality companies that offer multi-program upside. These are bets on the next Genentechs, not the next quick exits.

This quiet boom in private biotech isn’t making headlines like AI — but it just might be seeding the most impactful therapies of the next decade.

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If you are a builder, investor or researcher in the space and would like to have a chat – please reach out to me at amit.k@thelotuscapital.com