While venture capital funding dipped to a six-year low in 2025, it nevertheless remained above pre-pandemic levels for Massachusetts-based biopharma companies, according to MassBio.
Money flowing into biopharma slowed to a trickle in 2025. But even as venture capital dropped to its lowest level in years, analysts have spotted hopeful signs, offering encouragement that funding could pick up in 2026.
Across Massachusetts—one of biopharma’s central hotspots—venture capital (VC) investment dropped to $6.85 billion in 2025, the lowest it has reached since 2019 when companies collectively scored $4.37 billion in VC funding, according to the 2025 funding and pipeline report of Massachusetts-focused trade group MassBio. For comparison, VC dollars pumped into the state equaled $7.89 billion in 2024.
“Reluctant private investors, a closed IPO window, cautious pharma, and layoffs [defined] the first half of the year,” the group wrote.
Things started picking up toward the end of 2025, however. Around 60% of all VC funding last year was announced in the back half of the year, which, according to MassBio, could be a sign of good tidings for the industry into 2026.
“Decreased interest rates and increasing clarity on pricing and tariffs enabled a stronger second half period,” a MassBio representative told BioSpace in an email. “A stronger second half of the year in VC funding and M&A [mergers & acquisitions] activity is a trend to watch for the new year,” the group added in a news release alongside its report.
Such an outlook tracks with similarly optimistic forecasts from other analysts. Leerink Partners was “generally sanguine” about biopharma’s prospects for fundraising this year as the industry continues to gain momentum and attract attention from generalist investors, the group said in a Dec. 17 report.
Policy and regulatory concerns that clouded the first half of 2025—issues that MassBio also referenced in its own report—“have mostly been replaced by enthusiasm for rebased guidance, positive clinical news, and several sectors navigating much (but not all) of the uncertainty in Washington,” Leerink added.
Massachusetts companies are poised to take advantage of the industry’s momentum, according to the MassBio report, which found that pipelines in the region grew 14% year-on-year, surpassing the national average of 6.8%. Much of this increase was due to a jump in the number of preclinical molecules. Drugs for cancer and of the central nervous system comprise the bulk of Massachusetts’ pipeline, according to MassBio’s report.
The 14% bump is notable, as MassBio reported that China’s pipeline increased by more than 37% after years of government investment and regulatory streamlining. The U.S. has become increasingly concerned about China as a competitor in this sector as companies increasingly look East for novel assets.
