By dollar volume in the DMV, 2019 brought in the lowest amount of VC since 2013 - Technical.ly DC

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Feb. 4, 2020 2:39 pm

By dollar volume in the DMV, 2019 brought in the lowest amount of VC since 2013

For the fourth quarter of 2019, local companies brought in a total of $357 million into 38 deals. That was a major drop from 2018's Q4, which saw $660 million into 24 deals.
D.C. views.

D.C. views.

(Photo by Flickr user Palácio do Planalto, used under a Creative Commons license)

Startups in the DMV region brought in less venture capital funding in 2019 compared to recent years, according to data shared in a recent PricewaterhouseCoopers (PwC)/CB Insights MoneyTree report.

Venture capital activity in the D.C. area — which includes cities spanning from Northern Virginia to Baltimore — for the fourth quarter of 2019 totaled $357 million into 38 deals. The drop in dollar amount was “stark,” as Brad Phillips, a director in PwC’s Emerging Company Services practice, told Technical.ly, since 2018’s Q4 saw $660 million into 24 deals.

For 2019 annually, DMV startups saw $1.39 billion into 165 deals. This was a 39% decrease in the amount of dollars compared to 2018, which brought in $2.27 billion into 168 deals. The average deal size also dropped drastically from $13.5 million in 2018 to $8.4 million in 2019. By the dollar volume, 2019 was the lowest for the DMV region since 2013.

There were many instances that factored into the decrease in funding last year, but above all, we have to consider that 2018 was just a really good funding year for area startups, Phillips said.

“2018 was great for funding in the region, but as we admitted, it was a bit of an outlier,” he said. “We didn’t see the typical Q4 bump in 2019, so therefore the annual investment volume was lower compared to previous years.”

Historically, VC funding in the region has strong fourth quarter raises, but that just wasn’t the case in 2019.

Some top Q4 deals for the DMV region include College Park, Maryland-based quantum computing company IonQ’s $55 million Series C, D.C.-based Arcadia’s $30 million Series C and $20 million in Series B funding for D.C.’s WhyHotel.

Also, 2018 was the best year for the DMV region by dollar amount since 2001, according to the data. There were also no mega deals in the DMV region in 2019 — that’s deals over $100 million — while there were three of these deals throughout 2018. Of the 165 deals in 2019, only 18 of them amounted to $20 million or more.

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Annually, funding for startups in the healthcare sector dropped 42% and those in the internet sector dropped 30% compared to 2018, Phillips said. Though it was less, these two sectors still bring in the most funding in the region. Internet startups brought in the most funding last year with $495 million, and healthcare companies saw $362 million. Companies in the computer hardware and services sector brought in $107 million; $55 million of that was raised in the fourth quarter alone.

Despite the dip in funding last year, Phillips said that these 2019 numbers don’t show that the D.C. area isn’t a viable market to start a company or land funding. To break it down by state annually, Maryland brought in 44% of funding for the region, D.C. saw 22.5% and Virginia saw 33.5% in 2019.

Twenty-seven startups in D.C. proper brought in $312 million in venture capital last year. D.C.’s 2018 Q4 was 62% better than its 2019 Q4 and overall, 2018 was the District’s best year for dollar volume since PwC and CB Insights began publishing the quarterly MoneyTree report in 1995. When compared to other states in 2019, D.C. ranked #26 for the amount of deals and #22 for the amount of dollars brought in.

Some top investors for the region last year include GrowTech, CIT Gap Funds, CamberCreek, Motley Fool Ventures and SWaN and Legend Venture Partners.

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