Startups

This report shows a slow pre-pandemic start to 2020 VC deals

Greater Philadelphia's venture capital deals made in the first quarter don't say much about where the rest of the year will fall.

It’s hard to conclude much of anything from 2020’s first quarter numbers for venture capital deals in the region, as the majority of Q1 took place before the COVID-19 pandemic hit the state and shut it down.

The possibility of a widespread pandemic was not unknown during the period between January and March, when the lockdowns and social distancing started in Delaware. Did a looming threat affect Q1? It’s hard to say. The impact will be much more apparent in Q2 and beyond.

In the Greater Philadelphia area, the first quarter of 2020 saw $193 million invested into 12 companies, according to a recent PricewaterhouseCoopers (PwC)/CB Insights MoneyTree report — a 36% drop in dollars spent compared to Q1 of 2019, and a drop in number of deals by about half.

Of that $193 million, $3 million in investments are credited to Delaware, with two deals of $1.5 million each — which would put Delaware at #44 in dollars invested, and in a five-way-tie for #27 in deals. However, Delaware’s reported Q1 2020 dealmakers are:

  • Instant Teams, an internet software and services company registered in Rehoboth Beach
  • Youverify, an internet software and services company registered in Lewes

Alas, both of these companies appear to be inc. only: Youverify seems to be based in Lagos, while Instant Teams itself is fully remote (albeit with a Google Voice number that starts with a 302 area code). We’ve reported on this issue of the false Delaware HQ before, and it’s bad news because the percentage of that $3 million directly benefiting Delaware is significantly less than it would be if those companies were actually based here.

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Moving forward in this most uncertain of times, will we see quarters like 2019’s $94 million Q2? It’s hard to be optimistic about much economically at the moment, but Delaware is a medtech/biotech-heavy state, so you never know.

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