The chaos of 2020 didn’t dampen venture capitalists’ deal activity in the D.C. region.
Collectively, companies in the D.C. metro area raised $1.957 billion over 162 deals for the year, according to the latest MoneyTree Report from PwC/CB Insights.
The latest report offers another data point in a trend that’s been playing out in recent years: More venture dollars invested in fewer companies.
The number of dollars invested in 2020 was up 30% from 2019. This came with a 10% uptick in the average number of dollars raised, when compared to the last five years. The 2020 average deal size of $13.9 million was 41% higher than 2019.
“If you look back since 2013, most years the average deal size came in somewhere between $6 and 10 million, so the fact that we are at $13.9 million is a remarkable statistic,” said Brad Phillips, a director in PwC’s emerging companies practice.
Nevertheless, the number of deals is falling — a trend that’s been playing out since 2015. In 2015, there were 234 venture deals in the region, and it has declined each year since then. Of the last five years, the 162 deals recorded are the low point.
But this trend is not playing out in each of the region’s jurisdictions. Companies based within the District raised $404 million across 34 deals, a 35% increase in dollars. And in this case there was a 13% increase in number of deals compared to 2019.
“It was a good year for D.C.,” Phillips said. “The annual average of $445 million over the last five years is significantly higher than the five years prior.” From 2010 to 2015, the average was $333 million, he said.
Among the D.C. companies appearing in the top 10 deals for the region, dollars-wise, were funding rounds for Pie Insurance and FiscalNote. DMV companies elsewhere among the top 10 included McLean, Virginia-based Somatus, Gaithersburg, Maryland-based Sirnaomics and Xometry, Rockville, Maryland’s Immunomic Therapeutics and Oncoimmune and Bethesda-based Aledade.
This region isn’t the only one seeing more VC activity. In all, companies across the country raised $130 billion in 2020, bringing a 15% increase of new record in a pandemic year. That was driven by 318 megarounds, which are defined as being worth more than $100 million.
As we’ve noted in past quarters, an initial slowdown in March 2020 didn’t prove to be a trend, as investors that had already raised capital continued to invest. Phillips said that pipeline of dollars to venture firms is still flowing strongly, so the strong investment activity is expected to continue, as well.