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MA Seed-Stage Funding at Critical Juncture

While deal flow is healthy, 2014 will be pivotal year to assess trends in funding startups

CAMBRIDGE, MA (August 20, 2014) – Seed-stage funding in Massachusetts companies continues to grow, but 2014 investment must near $200 million to sustain five-year averages and ensure a solid startup environment into the next decade, according to an annual industry report published by MassBio.

The 2014 MassBio Industry Snapshot shows Massachusetts leads in federal research funding and venture capital invested per capita, as well as research and development jobs, but that recent dips in seed-stage funding could negatively impact innovation long-term.

“Massachusetts’ strength in the life sciences depends on its vibrant startup and early-stage research activities, but funding for those activities—the fuel for industry growth here—is getting more difficult to come by,” said Robert K. Coughlin, President & CEO of MassBio. “The Industry Snapshot and MassBio’s recent Impact 2020 report demonstrate that we must find new avenues for companies to seeking seed funding to ensure life-changing treatments make it out of the ‘valley of death’ and into the hands of patients in need.”

In aggregate, Massachusetts seed-stage deals have grown in number and size since 1999. In the last five years, Massachusetts companies have received 33.4% of all seed funding for biotech in the U.S. Over the past decade, Massachusetts has outperformed the nation in percentage of deals and investment at the seed-stage as a percentage of total venture funding.

While this is positive news, there has been a drop in MA seed-stage funding since the 2008-2010 highs and 2014 figures will determine whether the current five-year average is equal to that of the prior five-year period.

Other industry statistics are trending positive and the industry’s economic impact as measured by MA-based payroll topped $7.2 billion.