Senior Vice President
East Coast Regional Director
City National Technology Group
(617) 380-5608
Bill.Sweeney@cnb.com

boston venture capital

Boston claimed the No. 2 spot in the tally of top U.S. venture capital destinations last quarter, as the region's biotechnology start-ups remained a huge draw for global investors.

Boston-area companies received $1.84 billion in venture money, up 57% from the second quarter and up 170% from the third quarter of 2014, according to data firm CB Insights. The region's financing total was second only to Silicon Valley's $6.93 billion.

A total of 80 companies in the region got funding, up 13% from a year earlier, though down 15% from the second quarter.

The single biggest Boston VC investment last quarter was a $300 million Series D infusion for DraftKings, an online fantasy sports service founded in 2012. The company has helped fuel the explosive growth of fantasy sports leagues, which attract millions of fans with the chance to win cash prizes based on the performance of rosters of pro players they select.

But DraftKings and its New York rival, FanDuel―which also got a big VC infusion last quarter―now face an inquiry by New York State's attorney general into possible misuse of private data by the sites' employees. Questions about the businesses could bring government oversight to what has been an unregulated industry.

Though DraftKings may get the spotlight, the key to Boston's VC appeal is its thriving health care industry. That sector accounted for seven of the top 10 Boston funding deals last quarter. They were led by Mevion Medical Systems, which got $200 million in Series H capital from VC firms including two Chinese investment funds. Mevion, founded in 2004, has developed cancer radiation-treatment devices that it says are the most efficient and cost effective in their class.

Half of Boston's top-10 deals last quarter were health care companies raising just their second round of financing, or Series B. That shows VC firms' interest in the region's newest ideas.

That interest could be dampened by market forces, however: publicly traded biotech stocks have tumbled in recent months, hurt partly by political criticism of high drug prices. "Weakness in the public markets could make some VC funds more cautious in the private markets," said Bill Sweeney, East Coast regional director for City National’s Technology Group. "But investors know the long-term potential in biotech still is enormous."

Among Boston-area biotech startups, Editas Medicine took in $120 million in Series B funding last quarter. The two-year-old firm is a pioneer in the "gene-editing" technology known as CRISPR/Cas9. The goal: devise precise gene modifications to treat the underlying causes of diseases. Another gene-editing company, Intellia Therapeutics, got $70 million in Series B funding last quarter. Like Editas, Intellia is developing CRISPR/Cas9 technology.

Also in the biotech sector, Syndax Pharmaceuticals is working on anti-cancer drugs focused on specific kinds of tumors, including those seen in lung cancer and melanoma. The company received $80 million in Series C funding last quarter.

EQUITY FINANCINGS FOR BOSTON VENTURE-BACKED COMPANIES*

  3 Q 2015 2 Q 2015 1 Q 2015 4 Q 2014 3 Q 2014
Number of Financing Deals 80 94 93 94 71
Amount Invested ($MM) $1,835.7 $1,171.9 $1,369.4 $1,557.0 $681.1

TOP 10 DEALS IN BOSTON

COMPANY NAME DESCRIPTION CITY ROUND TYPE RAISED ($MM) INVESTORS
DraftKings Daily fantasy sports platform Boston Series D $300 Atlas Venture, GGV Capital, DST Global, Fox Sports, Wellington Management, Major League Baseball, The Raine Group, The Kraft Group, Madison Square Garden, Accomplice, National Hockey League, Major League Soccer
Mevion Medical Systems Provider of proton therapy systems for use in radiation treatment Littleton Series H $200 Venrock, CHL Medical Partners, ProQuest Investments, Caxton Health Life Sciences, Hopu Investment Management, YuanMing Capital
Editas Medicine Genome-editing technology Cambridge Series B $120 Google Ventures, Khosla Ventures, T. Rowe Price, Alexandria Real Estate Equities, Deerfield Management, Fidelity Investments, Jennison Associates, Viking Global Investors, Casdin Capital, EcoR1 Capital, Omega Fund Management, Cowen Private Investments, bng0
Onshape Full-cloud 3-D CAD system Cambridge Series D $80 New Enterprise Associates, North Bridge Venture Partners, Commonwealth Capital Ventures, Andreessen Horowitz, Bolt Innovation Group
Syndax Pharmaceuticals Developing entinostat as a combination therapy for specific cancerous tumors Waltham Series C $80 MPM Capital, OrbiMed Advisors, Domain Associates, Forward Ventures, Tavistock Life Sciences, Fidelity Investments, BioMed Ventures, Jennison Associates, Arrowpoint Partners, Delos Capital, EcoR1 Capital, RMI Partners, Cormorant Asset Management
Deciphera Pharmaceuticals Designing kinase inhibitor therapies for improved cancer treatment Waltham Series B $75 New Leaf Venture Partners
Intellia Therapeutics Gene-editing technology Cambridge Series B $70.0 Atlas Venture, OrbiMed Advisors, Novartis Venture Funds, Janus Capital Group, Sectoral Asset Management, Fidelity Investments, Foresite Capital Management, EcoR1 Capital
WAVE Life Sciences Developing stereopure nucleic acid therapeutics to target underlying causes of rare genetic diseases Brighton Series B $66 New Leaf Venture Partners, Redmile Group, Fidelity Investments, Jennison Associates, RA Capital Management, Clough Global, Foresite Capital Management, Kagoshima Shinsangyo Sosei Investment, Cormorant Asset Management
Ra Pharmaceuticals Developing drugs for the treatment of life-threatening disorders Cambridge Series B $58.5 New Enterprise Associates, Morgenthaler Ventures, Novartis Venture Funds, Amgen Ventures, RA Capital Management, Novo Ventures, Lightstone Ventures, Rock Springs Capital, Limulus Venture Partners
Acquia Cloud platform for building, delivering and optimizing digital experiences Boston Series G $55 New Enterprise Associates, Split Rock Partners, Centerview Capital

 

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