When it comes to local venture capital totals, the highs of 2018 were tempered by a cool start to the year. But that follows a pattern that’s been playing out for a few years.
In the first quarter of 2019, venture capital activity in Maryland totaled $79 million invested in 18 companies, according to data from a recent PwC/CB Insights MoneyTree report.
That was down 65 percent from the fourth quarter of 2018. For the state, it was the lowest funding total since the fourth quarter of 2016.
“It was a significant drop. We would’ve hoped for a stronger quarter, dollars-wise,” said Brad Phillips, a director in PwC’s Emerging Company Services practice. But, he said, it’s important to keep in mind that things have tended to fluctuate over the last five years, depending on when a large deal occurs: “The totals on an annual basis have been relatively volatile.”
For instance, Phillips said, the total in 2016 for the state was $280 million. Then, the next year hit $890 million. And this quarter follows the highs of last year, when Maryland’s VC haul topped $1 billion — its highest point since 2001. The absence of a big deal, like Gaithersburg-based Viela Bio’s $250 million raise in the fourth quarter of 2018, can mark a big difference.
Nationally, investment totals fell by 36% for the first quarter. But the trend of more money being invested in fewer deals continued.
So while the data for a single quarter may not look great, it sticks with the trend of “choppiness.” While it still remains to be seen whether the total for the year will bounce back up, Phillips points out that the second half of the year tends to see more funding, and the overall trend in the last four years still points toward growth.
“It’s not a reflection on whether or not Maryland is a good place to start a company or to invest in companies,” he said.
Funding for companies in the Baltimore metro area made up about 30% of the statewide total. Collectively, there was $40 million invested across seven deals in the area, the report states. This was the lowest funding total for the area since the $33 million posted across 10 deals in Q3 of 2017.
The top area tech deals for the quarter included the $15 million Series A for Fulton-based RackTop Systems, Allovue’s $4 million funding round, Terbium Labs’ $2 million investment from the founder of eBay’s Omidyar Network, as well as funding for BurnAlong and Vixiar Medical. One deal we covered would’ve added, but wasn’t considered in this report: Contrast Security’s $65 million Series D. The company is headquartered in Silicon Valley and so MoneyTree counts it there. Still, the application security company is planning to continue growing a dev office in Fells Point.
Nationally, the report states that investment totals fell by 36% for the first quarter. But the trend of more money being invested in fewer deals continued.
Things played out in a different way locally. The entire D.C. region, of which Maryland and Baltimore are a part for this report’s purposes, saw an uptick in the number of deals when compared with the last quarter, even as the overall dollar total fell. Phillips said it remains important to pay attention to smaller, seed-stage deals, as well.
“It doesn’t pay off for a little while,” he said, “but those are the companies that are then going to need the bigger rounds down the road.”-30-