Q2 deals signal the return of Baltimore’s momentum — but can it sustain?

While the answer’s still uncertain, the local energy is evident in the just-released Q2 Venture Monitor report, produced by PitchBook and the National Venture Capital Association.  

In Q2, the Baltimore metropolitan statistical area (MSA) recorded $291.45 million raised across 26 deals, with Blackpoint Cyber of Ellicott City leading the pack by raising $190 million. Kyle Stanford, lead analyst for venture capital at PitchBook, connected this broader momentum in nearby DC’s combined statistical area, which includes Baltimore.

“The impressive performance of Washington, D.C. and Baltimore in fundraising is evident,” he told Technical.ly. “In 2021, these regions raised a staggering $4 billion, with VC funds closing deals worth $3.1 billion last year. This year, $1.4 billion has already been closed, positioning Washington, D.C. as the fifth-highest in funds raised. This success solidifies the area’s status as a thriving venture market, particularly in the Washington-Baltimore region.”

Baltimore MSA’s top deals in Q2 2023

In a shift from Q1, when health tech startups dominated, Q2’s top MSA deals saw cybersecurity taking the lead. The list of deals highlights the diverse range of companies and industries attracting investments in the region:

1. Blackpoint Cyber, a managed detection and response software provider located in Ellicott City who recently exited from TEDCO’s portfolio, raised a $190 million, Bain Capital-led Series C in June. 
2. Another cybersecurity company from Ellicott City, Huntress, raised $60 million on May 16. This round was one of the year’s largest investments in Maryland.
3. Scene Health, a recently rebranded health tech company, raised $16.7 million in funding in April. PitchBook’s number, cited as a “Series B2” round, falls $1 million short of the $17.7 million the company self-reported from an oversubscribed Series B. 
4. Emit Imaging, a medical device company that focuses on turning images into data, raised $5.9 million in April. This company has offices alongside ARMR Systems and UM BioPark.
5. Rampart Communications, a Linthicum Heights-based company specializing in secure wireless communications, raised $5.0 million in May. 
6. Breachbits, an Annapolis-HQed company with a cybersecurity testing solution, nabbed $3.2 million in investment in April. Led by CEO John Lundgren, the company helps organizations fight data theft and hacking threats.
7. AlarisPro, a SaaS platform developed by military aviators, secured $2.3 million in May. Located on Clinton Street in Baltimore’s Canton neighborhood, the company provides safety and reliability data to support unmanned aircraft systems operators, maintenance professionals and manufacturers. 
8. Architectural firm Hord Coplan Macht landed $1.8 million in June. The company previously worked to turn West Baltimore’s Green Street Academy into an LEED Platinum-certified building.
9. Health tech company EpiWatch raised $1.5 million in June. Its app for Apple Watch users serves both as a consumer tool and a research study.
10. Finally, Longeviti, a medical device manufacturer based in Hunt Valley, secured funding of $1.2 million in April. 

What does this mean for the Baltimore region?

Michael Ravenscroft, a venture capital expert and the Maryland Momentum Fund’s managing director, said that these Baltimore MSA raises reflect a persistence in strong performance being rewarded despite any economic changes.

“Companies that show tangible growth, meet their milestones and have a clear path to a strong market opportunity are still attracting funding,” he told Technical.ly. However, he pointed out that investors now expect business models that make intuitive sense and growth projections including near-term profitability.

Ravenscroft acknowledged the heightened risk aversion among investors, as well.

“In the private capital markets, there is almost no appetite for risk — investors want as close to a sure bet as they can come, and the market is such that they can afford to wait it out,” he said.

He also stressed the importance of state-sponsored investment funds like the Maryland Momentum Fund and TEDCO, which play a critical role in supporting first-time founders and early-stage companies in the region. He cited Impruvon Health, another health tech company not listed in the MSA’s top deals, as a demonstrative success story.

Investors want as close to a sure bet as they can come, and the market is such that they can afford to wait it out.Michael Ravenscroft Maryland Momentum Fund

“Impruvon is a great example of a company with a strong founding team, a real market need, a viable and proven business model and a defensible strategy for growth,” he said of the Baltimore-based company, which recently raised over $1.17 million dollars. The Maryland Momentum Fund invested $300,000 of those funds, while TCP Capital Partners’ Propel Baltimore Fund and New Dominion Angels contributed $750,000 and $425,000, respectively. 

Ravenscroft elaborated that local startups may struggle if they don’t meet certain structural benchmarks. 

“Companies that have few proof points, are lacking validation from customers, have weak indicators of near-term growth and less clarity in their market opportunity will struggle to raise,” he said. 

To thrive in this environment, Ravenscroft advises founders to adapt their strategies and build relationships with investors early on.

“The best thing founders can do for themselves is go out to market early and often, speak with as many investors as possible,” he said, adding: “Founders should get comfortable talking to investors before they’re raising money, so they can get a sense for what funds might be interested and where they should focus their time in their fundraise.”

Comparing the quarters

The latest Venture Monitor report’s Q1 and Q2 summaries for Baltimore’s MSA include notable differences in both the capital invested and the number of deals. Here’s a breakdown:

• In Q1, the capital invested, as reported by Technical.ly, was $83.47 million across 15 deals. However, after Technical.ly reported these numbers, the figure increased to $98.34 million. In contrast, Q2 saw a significant increase in capital invested, reaching $291.45 million.
• Q1 witnessed a final number of 24 deals, while Q2 recorded 26 deals. 

Baltimore’s top exit in Q2

In Q2, Baltimore-based Haystack Oncology was acquired by Fortune 500 clinical laboratory corporation Quest Diagnostics for $450 million.