COVID-19 / Funding / Investing / Venture capital

Maryland VC funding defies dire pandemic predictions, rises in Q2

Area companies collectively raised $358 million for the second quarter of 2020, posting its best quarter in a few years — even amid an economic downturn.

When it comes to Maryland companies, the pandemic isn’t slowing down venture capital funding.

Data from the latest MoneyTree report by PricewaterhouseCoopers/CB Insights shows that Maryland companies collectively received $358 million in venture capital funding for the second quarter of 2020, marking a big uptick in dollars over the prior quarter even amid a global pandemic and economic downturn.

The first two quarters of the year had the same number of deals, with 21 companies receiving funding each quarter. However, the Q2 haul is notably higher than the $197 million invested in Q1, a 45% increase, dollars-wise. Accordingly, the average deal size jumped from $9.3 million in Q1 to $17 million in Q2.

(One note: Those figures vary slightly from what we reported back in April, as some late deals aren’t accounted for or change after the quarterly MoneyTree reports are published. When we reported on last quarter’s data, it appeared funding for Immunomic Therapeutics and IronNet Cybersecurity was being counted toward Q1’s total, but both companies are now listed as a part of Q2 total.)

“This was an exceptional quarter for venture raising in the state, especially given the expectations due to the COVID environment,” said Brad Phillips, a director in PwC’s Emerging Company Services practice.

It was paced by a pair of investment rounds worth more than $60 million for a pair of D.C.-area companies. This included a $64 million Series C for Bethesda-based healthcare technology company Aledade and a $61.3 million Series B for Rockville-based biotech company Immunomic Therapeutics.

From Baltimore city, the top deals came for Johns Hopkins spinouts, including a $35 million Series A for AsclepiX Therapeutics a $28.5 million funding round for LifeSprout and a $20.5 million Series A for Glyscend Therapeutics. Among the deals for city-based tech companies that were reported in the quarter, we also covered a $12 million Series B from Traitify, and new rounds from Cerebro Capital and BurnAlong.

When it comes to computing and software, College Park companies posted a trio of notable deals, as Immuta raised a $40 million Series C, INKY raised $20 million in Series B funding and IonQ raised $10 million.

In all, it stacked up to be a standout quarter, VC-wise. Compared to the region as a whole, Maryland accounted for 43% of the deals and just over half of the dollars invested.

“From a dollar standpoint it was the best quarter for the state since Q1 of 2018 and the fourth-best quarter in 20 years,” Phillips said.

Given how the last quarter ended, this was unexpected: After starting the year off on a steady pace of deal activity, the pandemic brought a dip in the final three weeks of March to end the first quarter. This is typically when deal activity is highest, said Phillips.

“Going into Q2, we basically said, there’s no question that COVID is going to affect things,” he said.

But that lull didn’t prove to carry over into the entire next quarter.

“We’d be lying if we said weren’t a little surprised, particularly in the D.C. metro,” Phillips said.

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 Maryland’s unemployment systems have been flooded with applicants, as more than 970,000 people filed claims since the pandemic began.

But when it comes to investors, it seems there’s still capital being set aside to lay down early bets. Nationally, the top five VC firms each raised more than $2 billion in new money to invest in companies during the quarter.

“There was a lot of dry powder to begin with, and now firms went out and raised even more money,” Phillips said.

Companies: PricewaterhouseCoopers

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