JPMorgan Jumps Into Healthcare Space As VC Funding Slows, Valuations Fall

JPMorgan Chase & Co. JPM has launched a healthcare venture-capital practice through its JPMorgan Private Capital arm. 

In the first two quarters of 2021, 123 companies raised $5.2 billion in healthcare funding, in New York City alone, according to the New York Healthcare Innovation Midyear Report.

Furthermore, U.S. healthcare venture capitalist fundraising hit a record $28.3 billion in 2021, compared to $16.8 billion in 2020, according to Medical Design and Outsourcing.

What Happened: Venture capitalist funding to U.S. healthcare firms is expected to decline to $16 billion this year, but JPMorgan is still entering the market even though the pace is slowing.

JPMorgan Private Capital is a growth-equity and private-credit investment group within J.P. Morgan Asset Management. The venture-capital-like fund will target life sciences through early- to growth-stage companies in the consumer and technology and climate-technology sectors, as reported by the Wall Street Journal.

“It took about 18 months to launch the new healthcare venture team,” said Brian Carlin, CEO of J.P. Morgan Private Capital.

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Why It Matters: As biopharma IPOs find less favor and venture capital funding is slowing, JPMorgan believes it is an opportune time to foray into the life sciences space as valuations go south.

“The entry point for the life-sciences space is probably one of the best we’ve seen,” Carlin said.

For instance, there were 1,035 IPOs in 2021, and so far in 2022 there have only been 161 IPOs, the lowest recording since 2016, as per Stockanalysis.com

This allows JPMorgan to compete with other banks with VC funds, such as Deutsche Bank DB, which uses a Corporate Venture Capital program that enables them to advance the bank’s commitment to technology and innovation.