The Covid-19 pandemic ravaged many parts of the economy — but in one sector, the pandemic led to an influx of cash. Venture capital funding for infectious disease companies reached an all-time high in 2020 at $2.9 billion according to an analysis conducted by Pitchbook for Forbes. There were also a record number of new deals: 155, an 80% increase compared to a decade ago.

Companies that focus on infectious disease, whether developing vaccines, antibiotics, or other therapeutics, have been historically underfunded. While oncology startups like Grail and Tempus raked in billions and direct-to-consumer brands like Ro and Hims became unicorns, many infectious disease companies in years past struggled to get even a fraction of the same backing. Glenn Rockman, founder and managing partner at Adjuvant Capital, says that part of the reason infectious disease companies have faced a chronic cash shortage is simple math. Drugs for cancer and heart disease can have much higher price tags than a new antibiotic that might sit on the shelf as a last-resort treatment. “The profit opportunity compared to how risky it is to develop a new drug,” Rockman says, “that math is just much harder” for infectious disease companies. Rockman launched Adjuvant Capital last February with a $300 million venture fund for companies that address historically overlooked healthcare problems, including infectious disease.

Despite past obstacles, Covid-19 completely changed how investors view infectious disease companies. “What you’re seeing is the emergence of a new market,” says Andrew Nerlinger, a venture capital investor and cofounder of PandemicTech, a venture philanthropy that supports companies fighting infectious disease threats. He credits much of the new investment to familiarity — “you invest in what you understand,” he says, and now everyone understands first hand the devastating impact of a global pandemic.

Read the full article about funding for infectious diseases by Leah Rosenbaum at Forbes.