In Q1, DC-area companies are making a venture capital comeback

You might remember the unfortunate end of Q4 2022 when DC metro companies raised just $317 million across 60 deals — a low not seen since 2016.

But 2023 is looking up, according to the latest PitchBook-National Venture Capital Association (NVCA) Venture Monitor report. In Q1 of 2023, DC-area companies raised $765.8 million across 65 deals — a number that could still change, since not all numbers are reported at this time (for instance, the aforementioned Q4 2022 figure has since jumped to $437.9 million as more deals officially closed). Still, that’s significantly less than the $1.778 billion across 94 deals the region saw in Q1 2022.

Breaking that down further: DC companies raised $138 million across 18 deals. Maryland and Virginia (which includes the entire state, not just the DMV-local area) raised $133 million across 36 deals and $658 across 52 deals, respectively.

You might also remember another standout event from Q1: the collapse of Silicon Valley Bank and Credit Suisse, notable investors in the tech and startup world. But Clifford Rossi, professor of the practice and executive-in-residence at the University of Maryland’s School of Business, said that the strong start to 2023 amid these setbacks is a good sign.

Rossi noted that although the economy is still “trying to find its way,” the numbers for DC are still pretty strong. He said both interest rates and cash burns are still high, and investors are on the hunt for quality companies that don’t need a lot of financial runways to get going.

“They’re going to be looking for people that have good potential in a market that may become a little bit more suspect over the next six months to the one-year horizon,” Rossi told Technical.ly.

He does think, though, that interest rates are approaching a peak, and with Q1’s strength, it might be time for founders to think about raising again since interest rates tend to signal where the economy is heading.

“Given that, this might be a time to dip more than maybe a toe in the water and see if there aren’t some opportunities out there,” Rossi said.

With all this in mind, he believes a small recession prompted by the banking issues is still likely — as does the Federal Reserve. But he doesn’t think it will approach the caliber of 2008. Still, he suggests keeping an eye on market liquidity and cautioned that further banking turmoil could be a wildcard that leads to a downturn.

So, who’s responsible for these million-dollar ideas that could lead the charge of a potential recovery? Below, check out the region’s top deals for the top of the year:

1. Aura, a network management software company, raised $205 million in a megaround.
2. Medtech company ShiftMed raised $200 million in late-stage VC. Panoramic Ventures led the round with additional participation from Blue Heron Capital and Audacious Capital, and it follows the $45 million the company raised in 2021.
3. Placemakr, a hospitality company headquartered in DC, raised $65 million to grow its technology.
4. Arlington, Virginia’s EarthOptics, a soil tech company, raised $34 million, according to Venture Monitor. The company announced a $27.6 million Series B round in January.
5. ConnectDER, an energy tech company in Falls Church, Virginia, raised $27 million.
6. Otolith Labs, a DC wearable company backed by Mark Cuban, raised $25 million, valuing the company at $46 million.
7. Hypori, a Reston, a Virginia data SaaS company, raised $23 million in a Series B.
8. Axios Media, the communications tech company from Axios, raised $20 million.
9. DC-based Picnic Corporation, a human attack surface management platform, raised $20 million.
10. Aembit, an identity tech platform, raised $20 million.