In 2017, venture capitalists invested more money in fewer startups - Technical.ly Baltimore

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Jan. 10, 2018 8:18 am

In 2017, venture capitalists invested more money in fewer startups

Baltimore's funding year bore out the national trend, according to the latest MoneyTree report report from PwC and CB Insights.

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Nationally, startups are seeing bigger funding rounds from VCs to fuel the fast growth they need. However, fewer companies are seeing that money.

The end-of-year stats for 2017 illustrated the trend. While the dollar totals were the second-highest on record in 2017, venture capitalists funded the lowest number of companies in five years. That’s according to the latest MoneyTree Report from PricewaterhouseCoopers LLP (PwC) and CB Insights, which tallies up venture capital funding.

“The US venture capital ecosystem is also changing in terms of the mix of dollars and deals with a bigger role for mega-rounds [over $100 million], larger average deal size and a declining trend in deal count,’ said Tom Ciccolella, US Venture Capital Leader for PwC.

That played out in Baltimore. Total venture funding for the metro area grew by about $200 million, with $87.2 million in 2016 vs. $276.8 million in 2017, per MoneyTree. (Even when removing an outlier $103 million round Springworks Therapeutics, the total still nearly doubled.)

While later-stage companies like Personal Genome Diagnostics ($75M) and ZeroFOX ($40M) posted big numbers, the increase also came with a continued rise in seven-figure rounds for early-stage startups in the area. For the fourth quarter, companies such as Workbench, Enveil, Terbium Labs and MF Fire held that banner.

Overall, however, the number of companies funded in the area was down from 32 in 2016 to 26 in 2017.

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A similar trend followed statewide.

Funding totals also saw a big increase from year to year. VC funding in Maryland approached $890 million in 2017, as compared with $282 million in 2016. However, that money was doled out over the same number of deals each year, with 66.

The big numbers are eye-catching, and the report notes that they’re getting bigger with the introduction of players like the $93 billion SoftBank Vision Fund splashing big cash.

But they don’t tell the full story about companies just getting off the ground. Speaking of the national picture, CB Insights Anand Sanwal made the following observation:

“It is worth noting the pullback in early stage activity and the decline in overall deal activity as compared to recent years. Deals are still being completed, especially the bigger ones, but the early-stage activity which is vital to the VC ecosystem’s health did take a hit. There is a lot of early stage (seed capital) that has been raised so it’s likely to bounce back.”

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