Heightened diligence standards and longer decision timelines for early-stage startups slowed venture activity last year, J.P. Morgan found in a report published ahead of the bank’s annual healthcare conference in San Francisco.
Funding pressures on early-stage biotechs intensified in 2025, with the priorities of venture capital funds, public investors and large biopharma companies all squeezing access to capital for startups, according to a report by J.P. Morgan.
Ahead of its annual healthcare conference, J.P. Morgan published an analysis of biopharma funding and dealmaking in 2025. The bank found the number of seed and series A rounds fell from 228 in 2024 to 191 in 2025. The amount invested at those stages fell too, slipping from $10.6 billion to $8.7 billion. The number and value of deals in series B and beyond suffered a smaller decline.
J.P. Morgan said the trends widened the gap between early- and late-stage venture activity. Heightened diligence standards and longer decision timelines for startups slowed early-stage activity, the analysts said. At the same time, VC funds prioritized later-stage assets that have been partly derisked by clinical data. In total, 2025 saw 80 venture rounds with a sum that exceeded $100 million.
Public investors have adopted similar priorities. The number and value of initial public offerings fell from 2024 to 2025, with listings drying up after a strong start to the year. J.P. Morgan said companies that did go public were typically later-stage and modestly sized.
With investors staying on the sidelines, the bank said value creation shifted from venture rounds toward licensing deal upfronts in 2025. Biopharma companies committed $252 billion to license assets in 2025, up from $190.6 billion in 2024. With the average upfront share of the agreements holding steady at 7%, the jump in total deal size translated into more cash flowing to biotech.
Once again, however, with pharma companies prioritizing advanced assets ahead of patent cliffs, licensing dollars favored later-stage companies. Large biopharma companies paid an average of $185 million upfront in cash and equity for Phase III drug candidates in 2025, up from $53 million in 2024. The upfront value of Phase I and II assets fell in 2025, although there was an uptick in the amount paid for preclinical programs.
The focus on later-stage assets does make for bigger deals. The number of transactions with upfront fees below $10 million and in the $10 million to $99 million range fell last year, while the number of licensing deals worth more than $100 million increased from 34 in 2024 to 41 in 2025.
As the industry enters the second full week of 2026, there are early signs of an acceleration of VC activity. Parabilis Medicines’ $305 million series F led a flurry of deals that saw Alveus Therapeutics, Beacon Therapeutics, Corsera Health, Diagonal Therapeutics, EpiBiologics, Protege and Rakuten Medical all disclose financing rounds. Many of the companies have advanced clinical candidates.
Biopharma dealmakers have been active too, with Amgen and Eli Lilly starting the year with takeovers. Lilly has also disclosed a licensing deal, as have AbbVie and Pfizer. The agreements echo trends from 2025. Lilly’s licensing agreements covered an obesity asset, one of the boom areas of 2025, and multiple companies added cancer programs to their pipelines.
