In 2020, Maryland saw most VC funding dollars since 2001

Venture capitalists invested $1.159 billion into Maryland companies, according to data from the MoneyTree Report by PwC/CB Insights. It marks the third-highest VC dollar total in a year since 2000, and the highest since 2001.

The funding was invested over 79 deals that included a pair of megadeals over $100 million, which typically drive yearly totals up.

“Maryland not only had a good year in 2020 but the upward trend in funding over the last 20 years in Maryland is quite encouraging as well,” said Brad Phillips, a director in PwC’s emerging company services practice.

It also showed gains when measured against the region: Maryland companies accounted for nearly 59% of the total VC dollars in the D.C. region, and 47.5% of the total number of deals.

“Not only has the trend been good for Maryland, but over the last several years Maryland’s share of the regional amount has increased,” Phillips said.

Baltimore’s VC growth and biggest deals

Baltimore companies are also showing gains, as venture capitalists invested almost $295 million into companies in the city, which was the highest total in the state.

“Almost 26% of investments into the state went into Baltimore companies,” Phillips said. It wasn’t long ago where we’d have this report and in a quarter we’d have $7 million go into Baltimore, so that’s a very significant thing.”

The top-dollar deal in the state came in the fourth quarter: Hanover-based industrial cybersecurity firm Dragos closed on $110 million in new funding. In the state’s other “megadeal,” defined as over $100 million, Gaithersburg-based biotech company Sirnaomics raised $105 million. New funding for Gaithersburg-based manufacturing marketplace Xometry, Baltimore-based cybersecurity company ZeroFOX and Bethesda-based health tech company Aledade were also in the top five. Baltimore’s other entrant in the top 10 was AsclepiX Therapeutics, a Johns Hopkins spinout.

Maryland’s big totals were in line with national trends. In all, VC funding posted a record of $130 billion, despite the pandemic.

Cybersecurity funding

But along with the highs of the overall totals, funding data shows another key point: Deal volume at the seed and Series A rounds are down. A report issued Thursday from Fulton-based cybersecurity and data science-focused foundry DataTribe cited figures showing a 39.7% decrease in deal volume across the country for seed stage funding, and a 32% decrease for Series A, for 2020.

Deal volume for cybersecurity also had a decrease over the last two years, which started before the pandemic, the report states. Overall, the report states that cybersecurity had a flat number of deals throughout 2020, which means the sector was “resilient” given that there were declines in other industries.

And DataTribe cofounder Mike Janke points out that cyber is running ahead of the overall picture on many metrics. For instance, cyber companies are averaging funding totals of $3 million, while other sectors within tech taken together are averaging $2.2 million.

“Cyber continues to outstrip the rest of venture and seed by far, and now, for the first time in three years, cyber Series A valuations are much higher on average than the rest of tech,” Janke said. He added that D.C.-area companies are also holding some of the highest valuations in the sector, given the clustering of the industry in the area that makes it a tech strength not just for the region, but gives it a leading position in the country.

Yet it’s worth looking at bigger picture trends, as well. The money invested overall is increasing. DataTribe states that the median amount invested in seed rounds across industries went up from $500,000 in 2010 to $2.2 million in 2020. In cybersecurity, this went from $800,000 to $3 million over the same period.

While investment trends were consistent over years before 2020, the pandemic has brought growth in cybersecurity. Stepped up digital transformation at companies and work from home environments have created new attack surfaces that need to be protected. So even with economic uncertainty, the report states that it is expected that cybersecurity will remain “robust” going forward.