From Federal to State: Building the New Life Sciences Capital Stack | Life Sciences Snapshot – Q3 2025

This year, U.S. VC funding into the life sciences sector has cooled: Q1 softness was followed by a decade low in VC transactions in Q2. Despite the moderation in dealmaking volume, investors continued to deploy sizable checks, enabling the total capital invested in Q2 to outperform pre-pandemic levels of quarterly investment. Thus, fewer companies raised money, but those that did secured record check sizes while a fragile exit window kept many later-stage startups private for longer. This edition highlights quarterly investment trends and features a roundtable discussion on what’s driving the shift toward nontraditional funding sources, how companies can tap into state-level programs, and how investors and operators are adapting their strategies in response to this changing landscape.

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