The U.S. startup IPO market is coming back to life. Unless, that is, you’re a biotech company.
So far this year, just 16 funded U.S. startups in the biotech, drug discovery and medical device spaces have made their debuts on Nasdaq or the New York Stock Exchange, per Crunchbase data. That puts 2025 on track to deliver the lowest number of biotech IPOs in years, as charted below.
The sluggish IPO pace is one of several indicators that investors are growing more risk-averse toward biotech and medtech. Many of the contributing factors are Trump administration-induced. These include cuts to public research funding, leadership upheaval at the Food and Drug Administration and public health agencies, and questions around future drug pricing policy.
Venture investment in the space hasn’t fallen off a cliff, but it has dropped considerably. Per Crunchbase data, biotech, pharma and medical device startups pulled in just over $16 billion in seed- through growth-stage financing so far in 2025. That’s a 25% decline from the same period last year.
Moreover, as charted below, we’re still nowhere near the peaks scaled a few years ago.
IPOs may be scarcer, but they’re bigger
Back in IPO-land, meanwhile, the picture isn’t entirely discouraging. While the number of new market entrants has gone down, their average public market valuation has risen over the past couple of years. Billion-dollar-plus debuts — once uncommon in the space — accounted for a quarter of IPOs this year.
So far, 2025 has also brought one unusually large debut, from Caris Life Sciences, an AI-enabled precision medicine company with oncology as a core focus. Irving, Texas-based Caris went public in July and recently had a market cap around $9 billion.
Metsera, a developer of hormone therapies for obesity and related conditions, also made a splashy entry in late January. The New York startup, founded just three years ago, was recently valued on Nasdaq at around $3.3 billion.
And most recently, Heartflow, a heavily venture-funded developer of technology for diagnosing and managing coronary artery diseases, made its Nasdaq debut Tuesday, securing an initial market cap around $2.4 billion.
But although well-received, larger debuts do look bullish for the space, historically small and mid-sized offerings also play a big role in maintaining the health of the biotech startup ecosystem. For companies looking to fund costly R&D and clinical trials in particular, the IPO market has long provided a crucial source of capital.
A case for optimism?
One potential upside of the current investment environment, for some at least, is the potential for deals.
That’s the outlook from Bruce Booth, a partner at Atlas Venture focused on early-stage biotech.
He recently blogged: “The equity markets have collapsed in 2025, the IPO window is closed, the FDA is in turmoil, the NIH is being gutted … and it’s a great time to start new biotech companies.”
Booth’s reasoning is that because there are fewer startups being created today, there’s far less competition for resources and talent.
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Illustration: Dom Guzman
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