Corporate Venture Firms Propel Biotech Startups Amid Funding Slowdown

Corporate Venture Firms Step Up to Fill Biotech Funding Gap

In a significant shift within the biotechnology startup ecosystem, corporate venture firms have emerged as key players, filling the void left by traditional investors amidst a prolonged funding slowdown. This trend, highlighted by a recent BioPharma Dive analysis, shows that venture funds associated with pharmaceutical giants such as Novo Holdings, Eli Lilly, and Sanofi have become increasingly active in backing privately held companies throughout 2025.

Surge in Corporate Venture Activity

The data compiled by BioPharma Dive reveals a marked increase in corporate venture involvement in biotech startups. Novo Holdings has participated in 18 private venture rounds in 2025, while Eli Lilly and Sanofi Ventures have each contributed to 13 rounds. This represents a substantial uptick from 2022, when these three entities were involved in a total of just 11 private funding rounds.

Scott Beardsley, a managing partner at Novo Holdings, emphasized the critical role of corporate investors in the current climate: "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."

Strategic Advantages of Corporate Backing

Corporate venture arms bring unique benefits to biotech startups that extend beyond mere financial support. Their involvement can serve as a validation of a company's scientific approach, potentially attracting additional investors. Brad Robling, vice president of Lilly Ventures, noted that biotechs "see the value of relationships that align around shared interest in the science and are not solely based on financial opportunity."

This strategic alignment has proven particularly valuable in the current challenging fundraising environment. With initial public offerings (IPOs) becoming more difficult to execute, startups are remaining private for longer periods and require more judicious use of capital. The presence of corporate venture investors has been linked to increased success rates for biotechs, with a July report from Silicon Valley Bank finding that at least 70% of biopharma IPOs since 2022 included at least one corporate venture investor.

Navigating Potential Drawbacks

While the influx of corporate venture capital has been largely beneficial for the biotech sector, some industry observers caution about potential downsides. The close ties between corporate venture arms and their pharmaceutical parent companies could lead to funding decisions being influenced by shifting corporate strategies or leadership changes.

However, the corporate investors interviewed by BioPharma Dive maintain that their investment mandates are broader than simply aligning with their parent companies' immediate interests. 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 biotech funding landscape continues to evolve, the role of corporate venture firms appears set to remain significant, potentially reshaping the dynamics of early-stage drug development and commercialization in the years to come.