These 28 biotech startups have attracted the most VC cash - making them prime candidates for either an acquisition or an IPO

• Venture capital money flowing into biotech over the last few years has led to record levels of private financings, according to a new analysis by Jefferies analyst Michael Yee and his team.
• Based on industry trends, companies with funding rounds in the last two years could go public next year or in 2021, they said. Those companies could also be targets for M&A.
• Read on to see the companies with the top 30 fundraising rounds in that time period, which could be IPO candidates or M&A targets.
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It's a good time to be a private biotech company.

Venture capital funds have been flowing into the industry, prompting record levels of private biotech financings, according to a new analysis from Jefferies analyst Michael Yee and his team.

A large crop of those private companies could be set to go public in 2020 or 2021, or could even get acquired, Yee and team said.

"It will also be interesting to see how many of these may lead to M&A instead of IPOs," the Jefferies analysts noted. In the last few months, two private biotechs - cancer drugmaker Peloton Therapeutics and cell-therapy company BlueRock Therapeutics - were both sold to big pharma companies.

Being a biotech company in the business of developing new drugs is notoriously risky and expensive. Ballooning capital needs can propel biotechs to either go public or sell themselves before they're even selling a single drug.

The Jefferies team's predictions are rooted in what happened in 2017, when private financings gave momentum to a wave of IPOs in 2018 and 2019. Since then, the financing trend has expanded, with 40 to 60 private rounds being announced each quarter, an increase from 20 to 30 rounds per quarter in 2017, their analysis found.

Read more: These 10 buzzy digital health startups are poised to go public in the next 12 months

Yee and team say that this trend in biotech reflects the overall strength of VC funds right now, with large amounts of capital flowing into them and then out, to startups. The market has also been strong for biotech companies since the sequencing of the human genome in the early 2000s and especially since the passage of the landmark healthcare law the Affordable Care Act in 2010, they said.

Well-funded VCs are betting heavily on biotechs based on factors like management teams and innovative ideas, but they're also underestimating how much risk is in the mix, Wedbush analyst David Nierengarten told Business Insider.

"I have seen this trend before, and it ends poorly," he said.

The Jefferies analysis took a look at the top 30 fundraising rounds between May 2017 and August 2019. Read on to see the biotechs that made the cut.