In Q2, DC-area companies are back in the billion zone

In Q2, the DC area is on a bit of a rebound — in a good way.

After a not-so-great 2022 succeeded 2021 — a.k.a. the biggest year ever for venture capital — 2023 is shaping up pretty well so far. According to the latest quarterly PitchBook-National Venture Capital Association (NVCA) Venture Monitor report, Q2 is looking even better than Q1, which saw a return to a stronger market after Q4 2022’s major decline.

Here’s the breakdown: In Q2, DC and the surrounding metropolitan statistical area saw $1.013 billion raised across 73 deals. Of those, 15 came from DC, accounting for $142.6 million (as you’ll see below, one company made up almost $80 million of that number). In total, the state of Maryland saw $697.38 million across 50 deals and Virginia had $625.14 million across 64 deals.

Comparatively, DC-area companies raised $939 million in Q1 spread across 85 deals. In 2022, the region saw $1.19 billion in 93 deals during the second quarter, putting the region relatively close to this year’s count. It’s also worth noting that these are both lower than Q2 of 2021 but higher than all prior Q2s going back to 2014.

Nationally, Pitchbook Senior Research Analyst Kyle Stanford said that deal counts rose in Q2, though the value of the deals is lower. That likely means that founders are extending previous rounds and raising low without major dilution, as opposed to seeking a full round. In total, Stanford said that he’s predicting about $85 billion nationally for 2023, though he noted that approximately $10 billion comes from an OpenAI raise and $6.5 billion comes from Stripe.

In a more local look, the DC combined statistical area (which includes Baltimore, Stanford said) is one of the top six nationwide. He also noted that there’s been a large number of new funds in the region, including smaller investment funds, which he views as very important for ecosystem development.

“Without those, you’re not going to get as many seed deals; if you don’t get as many seed deals, you’re not going to have early-stage deals,” Stanford told Technical.ly. “The number of small funds in that market has been a really, really big catalyst for the growth and development of Washington, D.C.”

Clifford Rossi, professor of the practice and executive-in-residence at the University of Maryland’s School of Business, agreed that deals are likely going to stay small. In this environment, he said, investors are a little more hesitant to cut those large checks. But he sees the Q2 data as a positive in total and expects to see even more deals coming out of the third quarter than the region saw in the first half of the year.

“A lot of that is accounting by how well the market performs,” Rossi said. “If we see continued moderation in inflation, and we see continued moderation and holding the line on raising interest rates, then I would expect to see maybe more of a positive end to the last half of 2023.”

Here are the region’s top 10 deals from Q2:

1. Bethesda, Maryland’s Aledade raised $260 million in a Series F round in June. This is the fourth year in a row the company has raised a round of over $50 million.
2. ID.me, the identity tech company out of McLean, Virginia, raised $132 million in April.
3. Cyber company Shift5 $83 million (a $33 million extension of a $50 million Series B the company raised in February 2022).
4. Constanellis Aerospace, a DC-based company raising money for a moon mission, raised $78.9 million from undisclosed investors.
5. Arlington, Virginia data management platform Stardog raised $45.2 million, which includes a strategic investment from Accenture.
6. Artis Senior Living raised $40 million in later-stage VC. The McLean company has 25 senior living communities across the US.
7. Frederick, Maryland pharmaceutical company Theradaptive raised $32.2 million in June. The company was a 2023 ICON Award winner for Emerging Life Sciences Company of the Year.
8. AgNovos Bioscience, a Rockville, Maryland bioscience company, raised $31.5 million in a Series B.
9. SpecterOps, an Alexandria, Virginia cyber company, raised $28.7 million.
10. Frederick’s Veralox Therapeutics raised $24 million in a Series A2 round. In 2019, the company raised $5.4 million in a seed round.

It’s worth noting that Constantellis was DC’s top deal, while number 10 on the district’s top deals was Genrae’s $500,000 round. Aledade was the largest raise in all of Maryland, with Theradaptive and Veralox Therapeutics pretty close behind. ID.me, Shift5, Stardog and Artis Senior Living were Virginia’s biggest four deals, in that order.