COVID-19 / Funding / Investing / Resources / Venture capital

Surprise: Companies in the DC region raised 81% more in VC funding than last quarter

The region also hit an eight-quarter funding high in Q2, and this was the third-best quarter for dollar volume since 2001 in the dot-com period — yes, despite that pandemic.

Pie Insurance. (Photo via Pie Insurance's LinkedIn page)
Disclaimer: The PwC/CB Insights MoneyTree report is often updated after publishing, so the final numbers may vary from what's reported here.

In the second quarter of this year, D.C.-area companies continued to land venture capital dollars, despite the pandemic-prompted recession still raging.

Venture capital activity in the D.C. region — which includes cities spanning from Northern Virginia to Baltimore — for Q2 totaled $698 million into 49 deals, according to data shared in a recent PwC/CB Insights MoneyTree report. This is a huge increase of about 81% in dollars and 20% in number of deals compared to the first quarter of 2020, which totaled $385 million invested in 41 deals. The region also hit an eight-quarter funding high in Q2 — and this was the third-best quarter for dollar volume since 2001, the dot-com period.

This might be a surprise, since Q1 venture capital in the region saw early effects of COVID-19.

“COVID actually had little or no impact on venture funding [this quarter],” Brad Phillips, a director in PwC’s Emerging Company Services practice, told “Going forward, we don’t foresee a big dip. We actually saw venture spring in Q2, given all the dire predictions.”

An important caveat noted by Baltimore’s Stephen Babcock: Though VC has continued unabated, it’s worth remembering that it is just one indicator of the economy. Small businesses as a whole continue to struggle as spending has pulled back in many industries, and many have sought funding in the form of government aid. And unemployment systems have been flooded with applicants, as more than 970,000 people filed claims in Maryland alone since the pandemic began.

For companies in D.C. proper, $189 million went into 13 deals, which accounted for 27% for both dollar volume and amount of total deals in the region. When ranked against the nation, the District was ranked #17 in number of deals and #15 in amount of dollars raised. This quarter, the D.C. area saw six deals of $50 million and above, and three deals in the $40 million range.

The biggest deal in the region in Q2 was a $127 million mega deal for D.C.’s Pie Insurance, the #1 startup on DC’s 2020 RealLIST Startups. Some of the area’s other top tech deals in the quarter include Bethesda, Maryland-based healthtech company Aledade’s $64 million Series C, a $61.3 million investment for Rockville, Maryland-based biotech company Immunomic Therapeutics and Downtown D.C.-based data intelligence company Morning Consult’s $31 million Series A.

Overall, venture capital firms have already invested more than $1 billion into D.C.-area startups in 2020, and we’re only halfway through.

Nationally, there was roughly $26.9 billion invested into 1,374 deals, which is an increase of 3% in the number of deals compared to Q1 of 2020. This second quarter of the year was the biggest quarter ever for mega deals, Phillips said, with 59 deals total across the U.S. IPOs were also up by 60%, while mergers and acquisition deals decreased by 23%.

Companies: PricewaterhouseCoopers

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