Medical Sector: Early-Stage VC Fundraising Momentum Remains Strong in 2015

Preqin, a market fund research firm, tracked 99 early-stage venture capital funds that were still in the fundraising phase. These early-stage venture capital funds, which focus on the healthcare industry, indicated that they would broaden their industry horizons either fully or partially. Ultimately, these 99 funds raised a total of $7 billion. VCBeat has compiled part of the content as follows.

Undoubtedly, early-stage venture capital investment has recently gained significant momentum. In 2014, fundraising for this category of funds peaked at $5.8 billion. Founder Fund V, the top fundraiser among them, accumulated $1 billion in committed capital, substantially exceeding its original target of $750 million. The majority of these funds are dedicated to expanding opportunities in the medical IT sector and increasing investments in other high-tech industries such as biotechnology. This fund has become the largest early-stage healthcare venture capital raise in over a decade, signaling the growing convergence of the healthcare industry and technology investment—a trend further evidenced by the recent surge in popularity of wearable medical technologies. The increasing integration of technology and data analytics into our daily lives demonstrates the progress being made in the healthcare sector. Emerging companies committed to transforming industry operational models are worthy of investment, as these highly innovative firms, once successful, will deliver substantial returns to venture capital firms.

As of 2015, eleven early-stage venture capital funds focused on the healthcare sector had completed their fundraising. These eleven venture capital funds raised a total of $1.3 billion. The largest fundraising round so far this year was Lux Venture IV, managed by Lux Capital. This fund closed after reaching its target of $350 million. The capital will be primarily invested in the healthcare, life sciences, medical technology, and health IT sectors. Among the 99 funds currently in the fundraising phase this year, Domain Partners IX has set the highest target at $5 billion. Once fully raised, the funds will be exclusively invested in industries related to life sciences. This move aligns with Domain Associates’ overarching investment strategy, which focuses on companies driven by innovation and dedicated to advancing human understanding of health.

Although the market has consistently sent positive signals to early-stage venture capitalists looking to invest in the healthcare industry, we should not overlook the fact that in 2014, 45% of such venture capital funds still failed to meet their expected fundraising targets. This figure was only 37% in 2013. Data indicates that in recent years, the proportion of venture capital funds meeting or exceeding their targets has been fluctuating, as detailed in the table below. A dramatic shift occurred during the three-year period from 2010 to 2012. In 2011, hailed as a springtime for fundraising, only 20% of venture capital funds failed to reach their goals. As for current figures, 2015 proved to be a relatively good year, with 71% of closed venture capital funds having met or exceeded their expected fundraising targets. Venture capitalists naturally hope this trend will continue over time.


Amid intensifying competition in venture capital driven by heightened market caution, early-stage investors must exercise greater prudence in assessing whether nascent industries will yield profits. While the healthcare sector’s high profile may attract an excess of investors, it is also sparking a new wave of innovation in the field. These emerging enterprises are not only seeking to disrupt how we address various challenges in healthcare but also opening new avenues for wealth creation for private equity investors.