By Jason Parker, WRAL TechWire | July 12, 2018
Editor’s note: WRAL TechWire reports regularly about the three leading venture capital reports that are distributed on a quarterly basis: PitchBook-National Venture Capital Association, PricewaterhouseCoopers-CB Insights MoneyTree, and Dow Jones VentureSource. Because each report has its own sources and requirements for what is considered venture capital, the data varies and thus the numbers for North Carolina as well as national are different most of the time. We encourage you to read each of the three reports which can be found under the tag “Startups -Funding” at the top of the WRAL TechWire home page.
RESEARCH TRIANGLE PARK – While the deal flow wasn’t great, the influx of venture capital was for North Carolina startups and emerging entrepreneurial companies in the second quarter.
Those are among the data points in the latest MoneyTree VC report from PricewaterhouseCoopers and CB Insights.
For the first quarter since 2016, North Carolina did out of the top 15 states as measured by total deal volume, or the number of deals that occurred within the state, said Garrett Trip, partner at PwC.
“However,” he adds, “it was in the top ten for total dollar deal value.”
This performance was led by two industries in North Carolina, said Trip: Healthcare and internet software, each of the last three years.
And, furthermore, the $428,740,000 in deal value was the highest dollar value quarter for the state in the past three years, according to the MoneyTree data set.
Across the state, Durham companies have raised a total of $439,110,000 through the first half of 2018, with 13 total deals, or an average of $33,777,692 per deal.
In total, companies from seven cities in North Carolina—Chapel Hill, Charlotte, Durham, Morrisville, Raleigh, Wilmington, and Winston-Salem—raised $202,180,000 in the first quarter and $428,740,000 in the second quarter of 2018.
MoneyTree report tracks deals in NC
US HITS RECORDS FOR DEALS, DOLLARS, AND MEGA-ROUNDS
Nationally, the VC market experienced a record quarter for funding and deal activity, the MoneyTree report released today.
“Deal activity looks to be resurgent with $23B invested in VC-backed startups setting a new quarterly funding record, while also increasing activity to over 1,400 deals,” said Tom Ciccolella, partner, US Venture Capital Leader at PwC in the report.
Specifically, that $23 billion was invested nationwide across 1,416 deals. 45 of those deals were companies that raised $100,000,000 or more, a record quarter for as long as the report has tracked these type of mega-deals, despite these mega-round deals declining as a percentage of total venture capital investment funding to just 34 percent of all deals from a high of 39 percent in the fourth quarter of 2017.
Companies developing artificial intelligence technologies received funding with total investments exceeding $2.3 billion, representing roughly 10 percent of all investment in the second quarter of 2018. Eight of the mega-rounds, with companies raising more than $100,000,000, were companies developing artificial intelligence and machine learning technologies, the report found.
OTHER FINDINGS: GLOBAL INVESTMENT, FIRST-TIME VENTURE FINANCING RISE
It’s a good time to raise an initial round, the report suggests, with first venture financings as a share of all deals nationwide rose to 35 percent of the total deal volume up from 33 percent the quarter prior.
“The fundraising environment is good right now,” said Ben Weinberger, co-founder of DigitalSmiths and the first chief product officer at SlingTV, in an interview this week. Considering raising money? Now might be a good time to begin the fundraising process, said Weinberger.
Globally, investment is at an all-time high, increasing by 6 percent to $51 billion, the largest quarterly amount in the MoneyTree data.
Investors are still concentrated in California, regardless of the stage of funding, the report showed. Yet seed stage, early stage, and growth stage companies are seeing more interest and activity from overseas investors, the report found.
“Venture Capital managers based in California, New York, and Massachusetts dominate the VC industry in the US,” said Trip. “Firms in these states are responsible for only 40 percent of venture capital funds that have closed since 2009 yet they account for 83 percent of aggregate capital raised over this period.”