Pittsburgh VC made a comeback in Q4, but remained far behind national trends for 2021

Editor’s note: These figures may vary slightly, as some deals aren’t accounted for until weeks after quarterly VC reports are published.

Final venture capital numbers are in for last year, and Pittsburgh remained significantly behind the unprecedented activity at a national scale.

Amid an economy grappling with dramatic changes in business practices, social distancing shutdowns and other setbacks nearly two years after the pandemic arrived in the United States, investors are anything but shy. While 2020 had a slow start during a recession in the second quarter of the year, it bounced back to achieve a record breaking total of $166.6 billion raised across the country, according to the PitchBook-NVCA Venture Monitor.

2021 proved to be even more impressive, almost doubling that volume with a total of $329.8 billion raised, shattering the previous year’s record. The fourth quarter was the best of the year nationally, raising a total of $88.2 billion. And in fact, that was also true of Pittsburgh’s final quarter of 2021. But that’s not saying much compared to its paltry funding in the first half of the year.

Bigger, but still low numbers for 2021

From October through December of last year, the city raked in around $121.2 million — an increase from the $115.41 million of the previous quarter and more than double the $58.37 million and $54.38 million raised in the second and first quarter of 2021, respectively. But the total number of deals in the fourth quarter was also the lowest for 2021, at only 15.

That puts the final end-of-year totals for Pittsburgh far below what the city saw in 2020. In 2021, Pittsburgh raked in just under $350 million across 88 deals — a dollar volume that’s below what the city raised in the fourth quarter alone of 2020. Though both 2020 and 2021 were record-shattering years for venture capital amid a fluctuating economy, it seems the Steel City only benefitted from the first half of that action: The 2020 total for the city was just under $650 million across 101 deals.

Who made deals in Pittsburgh

The top deal in the fourth quarter of 2021 was a $67 million raise recorded on Dec. 28 from Westmoreland-based clean tech firm Watt Fuel Cell Corp., which specializes in the development and manufacturing of solid oxide fuel cells. That was also the largest deal by far out of Pittsburgh in 2021, though the city just saw an equally large raise for RoadRunner Recycling in the first week of this year.

The next largest deal from last quarter came from Oakland-based autonomous cybersecurity company ForAllSecure, which raised just over $19 million in equity funding at the end of October, according to an SEC filing. The company did not issue a press release on the news, so it remains unclear what the funding will go toward in the new year. Following that deal as the third most notable of the quarter was the $16 million raise from North Side-based Rimsys, which develops regulatory management software systems for medtech industries.

Despite the successful raises from these three firms, the overall numbers for the fourth quarter in Pittsburgh followed the low volume trends of the previous one, with no other company even breaking $10 million in a raise. Still, those within the top-10 deals of the last quarter point to potential for growth in the life sciences and green tech — something several experts have highlighted as possible new frontiers for Pittsburgh.

Autonomous greenhouse robotics company Four Growers and AI and robotics-powered crop data collection startup Bloomfield Robotics raised $7 million and around $2 million, respectively, last quarter. And two companies within the life sciences — stroke detection firm Forest Devices and digital diagnostic startup HEARTio — attracted $4 million and $1 million in funding, respectively. Other top deals this quarter included $2 million for agriculture firm PittMoss, $1 million for materials tech company Arieca and $1 million for AI-powered communication coaching service TalkMeUp.

What to do about it

But the smaller VC numbers this year don’t necessarily spell doom for Pittsburgh’s entrepreneurship ecosystem: Some venture capitalists and other investors have shared that the downturn of this year speaks not to a weakness, but a strength of local support that’s still building.

Black Tech Nation Ventures, 412 Venture Fund, Magarac Venture Partners and more are looking to provide new support for seed stage companies in the area. Those efforts are expected to bear fruit in the new year. And while 2021 may not have been a banner year for venture capital in Pittsburgh, it was for public offerings and other exits, suggesting that last year’s energy was focused more on leveraging the capital of 2020 than on attracting new rounds.

Still, with the early activity of RoadRunner and young startup CoPilot Systems and for philanthropy via Meta Mesh Wireless Communications, there are signs that 2022 may prove more generous with VC dollars in the Steel City.