Chinese VCs say the slowing of investments into U.S. biotechs is likely to get worse before it gets better. In addition to continued CFIUS concerns and the ongoing trade war, capital inflows to Chinese life science funds have started to decline.
Last year was a high watermark for U.S. biotechs raising money from Chinese VCs. According to BioCentury’s BCIQ database, in 2018, U.S. companies raised $4.2 billion across 66 deals that included a Chinese VC.
At the current pace, 2019 is unlikely to reach half of the 2018 total. Through the end of July, there had only been 19 deals involving a U.S. biotech raising capital from a syndicate that included a Chinese investor, and the total money raised through July amounted to just over $1 billion.
Six Chinese VCs cited concerns over the expanded remit for the Committee on Foreign Investment in the United States (CFIUS) as a contributor to the slowdown, though they disagreed on how large of an impact CFIUS has had so far.
In November, the U.S. Treasury Department introduced a pilot program giving CFIUS the ability to review not just acquisitions and majority equity stakes but any minority equity investment that gives a foreign investor access to privileged information from a U.S. company developing a technology that is deemed to