Bo biotech VC surges: a16z’s $700M, Sofinnova €650M & exit risks rise

The recent announcement by a16z contributes significantly to the momentum in biotech VC funding. While $700 million directed toward ‘‘Bio & Health’’ is a sizeable allocation, it’s just one portion of the firm’s broader $15 billion fundraising across tech-focused strategies. This shows not only confidence in biotech but also a diversified exposure across complementary tech verticals.

In Europe, the biotech venture landscape is showing strength. Sofinnova Partners’ €650 million for its Capital XI fund, exceeding its target, indicates growing LP appetite for European biotech. Likewise, the formation of the €150 million joint fund by EIB and Angelini Ventures underscores EU institutional support for biotech, medtech, and digital health with a strategic lens toward industrial competitiveness and healthcare system readiness. These funds bring capital for early and growth stage companies that historically struggled to access follow-on financing bridging academic research to clinical development.

However, the broader macro and structural environment still poses risks. In the US, biotech firms continue to wrestle with delayed or canceled IPOs, regulatory uncertainty, and R&D intensity that demands long time horizons to commercialization. Meanwhile, in Europe, fragmentation in regulatory regimes, supply chain and manufacturing capacity bottlenecks, and differing national policies impose additional friction.

Strategically, funds like a16z’s ‘‘Bio & Health’’ pose both competitive pressure and partnership opportunities for smaller specialized biotech VCs. The large-scale capital injections may continue to push up valuations, affecting investment entry prices, while also enabling needed investment in platforms, AI-augmented drug discovery, and translational infrastructure.

Finally, exit paths remain a key concern. With biotech public markets subdued and M&A increasingly selective, LPs will scrutinize evidence of durability and differentiation in pipelines before committing to new funds. Biotech VCs will need to demonstrate how their portfolios can navigate regulatory hurdles, technical risks, and capital intensity to deliver returns.