When it comes to exits, however, things look much, much slower.

To illustrate, we used Crunchbase data to examine IPO and M&A exits since 2023 for six firms that regularly top our active lead investor rankings. The sample set included: , , , , and .

For startup history buffs, it’s an impressive set of names. These firms were early backers in a roster of marquee tech brands such as , , , , , and . They’re known both for finding future stars and for selling or taking them public at hefty valuations.

Exits stall, especially IPOs

Lately, however, that’s not happening.

Crunchbase data showed that out of all lead investments from these firms, just have gone public since 2023. None have carried out an IPO so far this year.

In case you were wondering, that number represents a truly tiny share of total holdings. It’s also miniscule compared to how much these investors have been doling out in new rounds.

In just the past nine quarters 1, the six firms in our sample have participated as lead investors in , per Crunchbase data.��2 Those investments  were collectively valued at over $46 billion, with more than a third coming from mega-rounds for , and .

Meanwhile, the last U.S. lead portfolio companies for this group to go public — biotechs and — have fared poorly since their fall debuts. Together they’re valued at under $250 million — less than what they raised in venture funding before that.

There have also been more successful debuts since 2023. However, they mostly involved companies that went public several quarters ago. This includes grocery delivery service , marketing automation platform , and data security provider .

M&A was sluggish too

The pace of large acquisitions also looks sluggish in recent quarters.

Since 2023, the investors in our sample had just 39 for companies in which they’d led rounds. Of those, eight sold for less than the capital they’d previously raised from investors.

Even so, there were some big outcomes in the mix. Examples include ’s $1.65 billion purchase of cybersecurity provider in September, and ’s 3 $1.9 billion acquisition of data protection startup that same month.

The M&A deal count is much higher if we add deals with no disclosed price. These are typically comprised of small-but-solid exits for earlier-stage companies, acquihires, startups merging with startups, and asset sales of companies that didn’t make it. Per Crunchbase data, there were in our sample set since 2023.

Outlook: More of the same

Looking ahead, there’s no sign of an imminent pickup in IPO filings for portfolio companies in our sample set. The market for tech offerings in particular has been quiet of late, despite the large pipeline of private unicorns and speculative IPO candidates.

As for M&A, there was optimism in startup circles a couple months ago that a new White House administration would provide a more M&A-friendly regulatory environment. That hasn’t yet translated into a flurry of dealmaking, although of course it’s still early days.

The ability of hot, later-stage companies to fundraise and carry out secondary offerings in the private markets, meanwhile, has contributed to longer timelines to exit in recent years. Decacorns like Stripe and Databricks have shown it’s possible to raise successive billions without turning to public investors.

And so, the exit scene remains uncharacteristically slow.

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Very little about drug development is efficient. The failure rate for drugs making their way to commercialization is 90%, after which more than around $1 billion and 10 years is sunk into each one on average.

But technological advancements in data collection are propelling artificial intelligence in drug discovery, which may unlock the ability to find cures for diseases that evaded the scientific community for centuries.��

So far this year, startups in drug discovery raised more than $1.4 billion, according to Crunchbase data.

One of these startupsthem is , an AI drug discovery platform founded by Jacob and in 2018.

“There are thousands of problems sitting out there that we don’t know the answer for. Thousands and thousands,” said Berlin. “So having a platform that lets us go faster, be precise and scale can really transform the opportunities in front of us.”

How drug discovery currently works

Current processes of drug discovery are long and tedious. Scientists in academia or pharma make molecules. They look for “targets” (like proteins) the molecule can swim to in the body and deliver therapy.��

To do that, scientists need to make sure the molecule doesn’t mistake a healthy protein for a target, otherwise a drug swimming around in the body may attach to and kill a healthy cell—amounting to poison. Once scientiststhey get a target, it’s taken out of the body and tested against molecules in the lab to see what will stick.��

But as clinical trials continue, several of those drugs fail due to unintended toxicity in the rest of the body, or the drug itself working in the lab but not in humans. With those failures, it sinks millions of dollars and years of research are lost..

“It’s just this huge funnel where stuff can drop out at any point in time,” said , a partner at who invests in health startups. “And I think that the problems are very much at the very, very, very beginning of this process.”

Terray and platforms like it work differently. Terray compares molecules against targets, and the AI assesses what parts of the molecule correlate strongly with the target. Terray can then make new molecules that correlate even more strongly, refining it.��

Through leveraging data, drug discovery platforms can better predict outcomes of drugs at the start of the process. AI matches molecules with targets and simulates how it will work in the body, giving it a better chance of surviving clinical trials and lowering toxicity rates in patients.

“At the end of the day, it’s about innovation and trying to find interesting, novel ways of treating some really unmet medical needs,” said , a biotech investor and managing general partner at .

Pharma bets on early-stage technology

AI drug discovery is still nascent, and will require interdisciplinary knowledge of chemistry, computational engineering, machine learning and biology. Data collection in drug development only became popular in 2017, a shift we see in funding: Between 2017 and 2018, funding increased by 190%.�� 

“The foundational layers in terms of data generation were just not there for a long time,” Choi said. “In the last few years we have not seen the breadth of it. We’re just starting a data revolution.”

Nevertheless, large pharma companies like are betting big on this tech to accelerate the pace of drug development, raising profits and getting medicines into the market faster. Many pharma companies partner with AI drug discovery platforms. For example, Earlier this year, and .��

“The molecules that come out of the drug discovery as a result of AI, there’s only a few in clinical development right now,” Crean said. “It sounds kind of Star Trek-y. Yes, it sounds exciting, but I think we just have to try and manage our expectations.”

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Founded in 2016, Oakland, Calif.-based Modis had raised over the course of its lifetime in just one round that took place in October 2018 Series A co-led by and .

With a market cap of $1.85 billion, publicly-traded Zogenix describes itself as a “global pharmaceutical company developing rare disease therapies.” Modis, meanwhile, has a similar focus. The startup develops novel therapies for “rare genetic diseases with high unmet medical need.”

The biopharma space is not for the faint of heart. With long cycles, it can take many years for drugs to go through clinical trials with only the possibility of approval. So, Zogenix taking a $250 million bet on Modis at such an early stage is notable.

Modis’s lead product candidate, MT1621, is in late-stage development for the treatment of Thymidine Kinase 2 deficiency (TK2d), an inherited mitochondrial DNA depletion disorder that predominantly affects children and is often fatal.

In a press release, Zogenix said the clinical data on the candidate is thus far “compelling” with the potential for “an accelerated regulatory path in both the U.S. and Europe.”

Interestingly, investors don’t seem particularly excited by the news. Shares of Zogenix by nearly 13 percent to $43.53 at one point this morning.

In July 2018, Crunchbase News Reporter Joanna Glasner wrote about how exits in the biotech sector tend to be more low-key than other exits but not any less impressive. Since then, we’ve covered a number of large deals in the space, including Swiss biopharmaceutical company raising $200 million last November, bringing its to $7 billion, among others.

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