Following last year’s astonishing finish, a quieter quarter for DC venture capital

It would have been quite a feat to follow DC’s stunning $2 billion quarter at the end of 2023. But like the rest of the nation, the region had a more leveled-out first quarter when it comes to venture capital deal flow.

According to the latest Venture Monitor report, released quarterly by PitchBook and the National Venture Capital Association (NVCA), companies from DC metro and surrounding suburbs raised $813 million across 51 deals in Q1.

Of the latest numbers, 12 deals came from companies in DC propper, accounting for $49 million. The state of Virginia saw $603 million across 41 deals, and Maryland saw $304 million across 31 deals — though those statewide numbers include the areas outside of the DMV region.

It’s a slower start for the region compared to the year-ending quarter, which saw a whopping $2 billion in deals. And deal count was the area’s lowest in a decade. But the total value is more aligned with the rest of last year — Q1 of 2023, comparatively, saw $729 million in deals, per PitchBook, and Q2 had just over $1 billion.

Last year brought about $5 billion in total VC investment to the Washington-Arlington-Alexandra Metropolitan Statistical Area, following a $4.5 billion year in 2022.

The nation’s total VC deal count this quarter was $36.6 billion across 3,925 total deals, relatively on pace with Q1 of last year, if not a little “to the left of the bell curve than usual,” said NVCA President and CEO Bobby Franklin.

The numbers are nothing to worry about, Franklin continued, saying the VC business cycle has been “effectively reset” in recent years, and is leveling out in 2024.

Check out some of the biggest deals in the region below. As always, it’s important to note: These figures may vary slightly after publication, as some deals aren’t accounted for until weeks after quarterly VC reports are published, or PitchBook may find errors in its data.

DC’s biggest VC deals in Q1 2024

The top regional deals of this quarter were in the healthcare, energy and information technology industries. Here are the five largest, according to PitchBook data:

1. Clasp Therapeutics, creators of a next-gen version of immunoncology drugs called bispecific T cell engagers (TCEs), launched in March with a $150 million Series A.
2. Zephyr AI, a startup that curates large datasets combined with AI algorithms to build tools for the healthcare industry, raised a $111 million Series A in March.
3. Lightshift Energy, a battery storage startup based in Arlington, raised $100 million.
4. PerformYard, a performance management software company, secured a $95M equity investment.
5. Advantia Health, an Arlington-based healthcare provider, reportedly raised $82.7 million, according to PitchBook’s data.

National venture capital trends

DC’s experience in Q1 aligns closely to what the rest of the country experienced.

Kyle Standford, one of Pitchbook’s lead VC analysts, called Q1 a “calm” quarter in the report, saying that not very many outsized deals were closed, but overall deal count still stayed “relatively” high.

Valuations did rise, likely from a stronger performance of the public markets over the last few months, and the idea that already strong companies will be able to continue to raise in a slower market. Stanford did note that some market uncertainties and inflation have pushed the likelihood of lowered interest rates to the second half of 2024, and a recession “remains a possibility.”

Said Standford: “We don’t expect deal activity to pick up in a meaningful way in the near term.”