Business / Investing / Startups / Venture capital

This new investment report shows some declines, as well as Pittsburgh’s ‘resilience,’ in 2022

Exit deals are way down, reflecting national trends. But the region also saw an increase in dollars invested directly into local tech companies, per the report from Innovation Works and EY.

Innovation Works' Ven Raju. (Courtesy photo)
A new report from local startup boosters shows Pittsburgh’s apparent resilience in the face of economic headwinds.

Every year, state-backed funder Innovation Works and multinational professionals services network Ernst & Young release a report examining the state of investment in Pittsburgh’s tech industry. Their 11th edition, published this week, found that $1.05 billion came into the city across 176 deals in 2022, including venture capital, angel investments and IPOs.

That’s a decrease from the $3.6 billion seen in 2021, which many regarded as a banner year for the city. Yet Innovation Works President and CEO Ven Raju and EY Managing Partner Leon Hoffman told there is still plenty of cause for hope for the future. More than that, they agreed that due to the “challenging” state of the economy and high inflation, 2022 should be regarded as a year of “resilience.”

“We saw very strong activity here in Pittsburgh and I think that’s a testament to what has been built here over the years,” Hoffman said. He added that the decrease in capital in comparison to 2021 wasn’t something unique to the city, but something happening across the globe.

Read the “Investment in Pittsburgh’s
technology sector” report

In 2022, Pittsburgh still saw roughly $716 million of capital inflows from institutional investors, which is roughly a 20% increase from 2021. There were also $248 million of capital inflows from corporate investors, and $64 million from angel and seed investors. That’s a total of about $1.029 billion in investments directly into local tech companies.

“Pittsburgh has a lot going for it,” Hoffman said. “Over the course of the last five years, you’re seeing steady increases in terms of direct equity investment into companies in the region. And I think that’s just due to the strengths of the region.”

Nationally in 2022, there were far fewer exits and initial public offerings compared to a busy 2021, when Pittsburgh saw several big-name IPO and SPAC events (hi, Duolingo). Although there were fewer such events last year, the report noted that a new 74 VC firms invested in the city for the first time in 2022, which could be taken as a sign that funders are still willing to take a chance on the city.

Another strength of the region Raju and Hoffman noted was that the region’s universities attracted a total of $11 billion in investments for university research over the past decade.

“We have world-class universities and research institutions, we have fantastic tech and scientific talent,” Hoffman said.

While the sector that attracted the most investment in 2021 was the autonomous vehicles industry, in 2022, life sciences companies came out on top. Companies such as KaliVir Immunotherapeutics (undisclosed Series A), Novasenta ($40 million Series A) and Free Market Health ($13.5 million Series A) saw some of the largest early-stage deals.

Other big raises included RoadRunner Recycling’s $90 million and iraLogix’s $22 million, which their execs discussed in a panel Thursday morning. And one notable exit was RE2 Robotics’ acquisition by Sarcos in January 2022.

Ultimately, the experts said, although the impact of inflation and the pandemic will linger for the foreseeable future, 2022 was a fair year for Pittsburgh.

“Against a very challenging backdrop, there’s still a lot of positive momentum here in the market,” Hoffman said.

Atiya Irvin-Mitchell is a 2022-2024 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.
Companies: Innovation Works (Pittsburgh) / EY

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