U.S. venture capital funding for biopharma companies jumped more than 25% by dollar value during the second quarter compared with the second three months of 2013, as VCs capitalized on increased exit opportunities as the overall market continued to revive, reflected by the continuing IPO boom and rising valuations of companies in mergers-and-acquisitions (M&A).

A total $1.84 billion was raised in 122 deals during Q2 2014, according to the quarterly MoneyTree™ report, issued Monday by PricewaterhouseCoopers (PwC) and the National Venture Capital Association (NVCA), based on Thomson Reuters data. A year earlier, $1.47 billion was raised in 120 deals by companies PwC includes within “biotechnology”—a category that includes pharmas, biosensor makers, and six sub-segments of biotechs (human, animal, equipment, industrial, research, and other).

The quarter’s two largest funding deals were the $200 million raised by Intarcia Therapeutics, and $119.5 million by Proteus Digital Health. Drugs for humans accounted for most of the biotech investment, $1.4 billion, up 36% from the year-ago quarter.

“That really actually shows that venture capitalists support the industry,” Greg Vlahos, life sciences partner at PwC, told GEN. “There’s still a positive outlook on the biotech space.”

Biosensors for diagnostics attracted $132 million, more than double a year earlier (154%). The largest year-over-year investment gain of any sub-segment was animal biotech, which rocketed 810% to $80 million. Next was industrial biotech at $68 million, up 50% from Q2 2013, and three sub-segments that lagged behind a year ago: Pharmaceuticals ($77 million, down 67%); biotech research ($36 million, down 9%) and biotech equipment ($21 million, down 47%).

The declining segments do not signify future trouble for biotech since the sub-segments account for less than 10% of overall total investment in biotech, Vlahos said, and fluctuations in quarterly numbers reflect activity by one or a handful of companies.

According to Vlahos, the reviving market, IPO boom, and rising valuations give VCs more “liquidity” or assets that can be quickly converted to cash, allowing them to raise more money for investing in more companies. The first six months of 2014 saw almost as many biopharma therapeutic, diagnostics, and tools/tech IPOs (52) as occurred all of last year (54).

Since then, another 24 biopharmas have gone public—20 in July and just four this month as of August 26, as the yo-yo stock market of recent weeks has prompted many companies to ride out the Wall Street rollercoaster. That, in turn, should fuel demand for venture capital.

“We are seeing a volatile public market. There’s a significant amount of companies that are backlogged in the pipeline waiting out the volatile market, and they’re accessing venture funds for later-stage mezzanine rounds prior to their liquidation events,” Vlahos said.

VCs are also interested in funding cutting-edge where the probability of market success has never been higher, such as biosensors for diagnostics and stem-cell therapies, Vlahos added.

First-sequence funding, a barometer for startups across industries, rose to $244 million in Q2 2014 for biotech—up just 1.4% from the year-ago quarter, with a slight uptick in deals to 23 from 20. During the first half of this year, biotechs won $355.6 million in first-sequence funding, up about 12% from the first six months of 2013.

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