Funding for early-stage biotech companies declined in 2025, as venture capital funds, public investors, and large pharmaceutical firms focused more on later-stage assets, according to a recent report by J.P. Morgan.
J.P. Morgan’s analysis, released ahead of its annual healthcare conference, shows that the number of seed and series A funding rounds dropped from 228 in 2024 to 191 in 2025. The total amount invested at these early stages also fell from $10.6 billion to $8.7 billion. In contrast, deals at series B and later stages saw smaller decreases.
The report notes that “heightened diligence standards and longer decision timelines for startups slowed early-stage activity.” Venture capital funds have increasingly directed resources toward later-stage assets that have already demonstrated some success in clinical trials. In 2025, there were 80 venture rounds with investment amounts exceeding $100 million.
Public investors have shown similar preferences. Both the number and value of initial public offerings (IPOs) declined compared to the previous year, with most companies going public being late-stage and modestly sized.
With less investor participation in IPOs and venture rounds, the focus shifted toward licensing deals between biopharma companies and biotech firms. In 2025, biopharma companies committed $252 billion to license assets, up from $190.6 billion in 2024. The average upfront share remained steady at 7%, resulting in more cash for biotech companies through these agreements.
Pharmaceutical firms continued to prioritize advanced drug candidates as they approached key patent expirations. Large biopharma companies paid an average of $185 million upfront for Phase III drug candidates in 2025—an increase from $53 million in 2024—while payments for earlier stage assets decreased overall except for a rise in preclinical program deals.
The trend led to fewer licensing transactions with upfront fees below $10 million or between $10 million and $99 million, while deals valued above $100 million increased from 34 in 2024 to 41 last year.
As the industry moves into early 2026, there are signs of renewed venture capital activity. Parabilis Medicines closed a $305 million series F round alongside new financings announced by Alveus Therapeutics, Beacon Therapeutics, Corsera Health, Diagonal Therapeutics, EpiBiologics, Protege, and Rakuten Medical—all featuring advanced clinical programs.
Major biopharma dealmaking has also continued into the new year with acquisitions by Amgen and Eli Lilly. Lilly has entered new licensing agreements—including one for an obesity asset—and AbbVie and Pfizer have announced similar deals focusing on areas such as cancer therapies.
“Heightened diligence standards and longer decision timelines for startups slowed early-stage activity,” J.P. Morgan analysts stated in their report.
