"Private bio/pharma funding activity strengthened in September, reaching its highest level since early 2025 and reflecting a gradual re-acceleration in deal flow."

September 2025 marks the end of the third quarter with a significant uptick in deal activity, even though total dollars raised remain below early-year highs. The market continues to favor non-dilutive funding and smaller financings, with grants leading by deal count and early-stage rounds bouncing back from their summer trough.

This update breaks down key trends across private financings, early-stage activity, global and U.S. distributions, and quarterly patterns. Read our H1 2025 Bio/Pharma Funding Trends Report.

Funding Activity in September

Private bio/pharma companies raised $2.93 billion across 95 deals in September 2025. This represents a 46% increase in deal count compared to August (64 deals), although the total dollars raised were lower than August’s $3.9 billion.

The shift reflects a surge in smaller and mid-sized financings, marking the busiest month of the year in terms of activity volume. While large rounds were less prominent, deal flow broadened significantly, particularly in the United States and Europe (FIG 1).

Grants continued to play a central role in September’s funding landscape. With 20 grant events, up from 15 in August, they once again became the largest single category of private financings by volume.

Although grant values are not fully comparable to equity rounds, their consistent presence and scale underline the sector’s growing reliance on non-dilutive capital to sustain early-stage innovation (FIG 2).

Early-Stage Activity

Early-stage funding showed a notable rebound in September (FIG 3).

• 34 Seed and Series A deals, compared to 11 in August.

• Total early-stage capital: $1.01 billion, up from $211 million in August.

While average round sizes remain below pre-2025 peaks, early-stage funding showed a meaningful rebound in both volume and value. September recorded 34 Seed and Series A deals totaling $1.01 billion, compared with only 11 deals worth $211 million in August. This sharp increase marks one of the strongest months for early-stage activity this year and indicates a more confident return of investors to the earliest stages of biotech financing (FIG 4).

Read our blog: 2025 Bio/Pharma Funding Trends: July’s Update

Global Distribution of Private Funding

Private financing in September remained anchored in the United States, but other regions saw stronger participation than in previous months.

• United States – $2.10B across 53 deals

• United Kingdom – $289.5M across 13 deals

• Spain – $119.4M across 4 deals

• China – $168M across 3 deals

• Canada, Japan, Switzerland, France, Netherlands – 3 deals each

Europe in particular showed a more distributed funding pattern, with the U.K. posting its strongest month of 2025 to date.

U.S. Distribution by State

In September, the U.S. accounted for the majority of private bio/pharma financings, with 53 deals totaling $2.10B. Activity was heavily concentrated in California and Massachusetts, but a number of other states registered smaller clusters or single large rounds (FIG 5).

• California (14 deals, $739M) and Massachusetts (13 deals, $495M) stood out as the twin powerhouses, together representing nearly 90% of all private U.S. funding.

• Secondary activity appeared in Washington (4 deals, $33.9M), North Carolina (3 deals, $7.5M), and Texas (2 deals, $101M).

• Several states, including New Jersey ($400M), Pennsylvania ($133M), and Oregon ($95M), hosted one-off large financings, underscoring how isolated transactions can put emerging states on the map.

Early-Stage Deals in the U.S.

Early-stage activity (Seed and Series A) continued to strengthen in September, with 19 U.S. private financings totaling $908.9 million. The majority of these rounds were concentrated in California ($385M) and Massachusetts ($321M), followed by Pennsylvania ($133M) and Maryland ($44M).

This regional pattern highlights the persistent dominance of traditional biotech hubs while also showing participation from smaller ecosystems such as Connecticut, Colorado, Missouri, and North Carolina. The sustained pace of early-stage deals underscores a measured return of investor confidence in emerging biopharma ventures (FIG 6).

Read our blog: 2025 Bio/Pharma Funding Trends: August’s Update

Quarterly Funding Overview: 2025 vs 2024

Looking at private bio/pharma funding on a quarterly basis reveals just how different 2025 has been compared to 2024. While early 2025 opened strongly in total dollars, the rest of the year has been defined by lower deal volumes and smaller average round sizes, even as activity slowly broadened in Q3.

📈 Q1 2025 – Strong Start

The year began with $11.96 B across 301 deals, marking the strongest quarter of 2025. January’s outsized financings carried momentum from late 2024, but investor selectivity quickly tightened through February and March. Despite a smaller deal count than Q1 2024, the dollar total was notably higher, signaling a front-loaded year dominated by large rounds.

📉 Q2 2025 – The Steepest Decline

Q2 saw a clear contraction, with $7.74 B across 234 deals, compared to $10.93 B and 381 deals in the same quarter of 2024. The decline underscores ongoing caution among investors and fewer late-stage financings. Grant activity remained steady, cushioning the slowdown but not offsetting the reduced venture flow.

⚖️ Q3 2025 – Broader but Smaller Rounds

Q3 recorded $8.88 B across 229 deals, up slightly in total dollars from Q2 but well below Q3 2024’s $9.83 B and 319 deals. This quarter’s performance reflected a broader base of smaller financings, with a clear rise in early-stage and grant-supported rounds. While deal counts remained modest, the quarter’s consistency suggests gradual stabilization after mid-year lows.

🆚 2025 vs 2024 – A Shift in Market Dynamics

Across the first three quarters, 2025 totaled $28.6 B over 764 deals, versus $28.9 B and 1,003 deals in 2024. The near-equal funding totals highlight that capital deployment has held steady in aggregate, but it is now spread across fewer, smaller rounds. The pattern points to an industry still recalibrating toward selective funding and risk-conscious growth, supported by steady non-dilutive capital inflows.

Public Market Sentiment

Public biotech markets continued to strengthen in September, marking the fourth consecutive month of gains.

• The XBI index opened at 92.88 on September 1 and closed at 100.2 on September 30, a 7.9% increase, hitting its highest level since mid-2023.

• The IBB index moved from 140.41 to 144.37 over the same period, a 2.8% gain.

The steady upward momentum in XBI reflects rising optimism among public investors, especially around small- and mid-cap biotech names. While the IBB’s slower growth underscores a more cautious sentiment toward large-cap companies, both indices indicate a more favorable macro backdrop for biotech compared to Q2.

This sustained improvement could provide tailwinds for private financing heading into Q4, particularly if investor confidence begins to translate into larger equity rounds and IPO activity.

Concluding Remarks

September closed Q3 2025 with $8.9B raised across 229 private deals, showing a modest improvement in value from Q2 but still trailing Q3 2024’s $9.8B and 319 deals.

While funding remains selective, the rise in early-stage and grant-backed rounds indicates broader participation compared to mid-year lows.

Across the first three quarters, 2025 reached $28.6B from 764 private deals, compared to $28.9B from 1,003 deals over the same period in 2024, nearly equal in value but leaner in volume.

This pattern highlights a disciplined market, where capital is being deployed more strategically, favoring focused innovation over scale.

Explore BiopharmIQ Funding Activity Dataset!

Article History:

10/20/25 MD, DG

Not legal, investing, or tax advice.