Crowdfunding / Investing / Venture capital

Defying predictions of tumult, Philly companies still raked in impressive VC dollars in Q3

Amid the COVID-19 pandemic, the Philly region is having a pretty standard year for fundraising.

The Philadelphia skyline. (Source unknown)
Full disclosure: This quarter's figures may vary slightly, as some deals aren’t accounted for until weeks after the quarterly MoneyTree reports are published.

After concern that the coronavirus pandemic would wipe out all chance of venture capital dollars for budding and developing companies this year, the numbers show that in the third quarter of 2020, Philly still received a hearty showing from investors.

The Greater Philadelphia region pulled in more than $100 million more in VC dollars in Q3 than it did in Q2, a recent PricewaterhouseCoopers (PwC)/CB Insights MoneyTree report shows. Across the region, Philadelphia-area companies saw $433 million invested across 21 deals. It’s a trend Brad Phillips, an advisor to emerging technology and life science companies at PwC, said mirrors national numbers: slightly fewer deals than before, but with higher dollar amounts.

Nationally, Phillips said, the last three months represented the second-highest quarter ever for dollars invested. Anecdotally, he said he’d heard that companies had been able to talk to more investors than before, since a Zoom call is more standard procedure now than traveling to investors.

“It looks like Zoom fatigue is less tiring than jumping on a plane,” Phillips said.

The Philadelphia metro area, which includes Wilmington, the Philly suburbs and parts of South Jersey, saw a 35% increase in dollars from last quarter, the report shows. Within city limits, 12 companies represent 38% of funding for the whole region and made up $165 million of VC dollars.

Again, healthcare and internet companies continue to lead the pack in investments, with life science industries like biotech dominating the region and representing $267 million in deals. The vast majority of dollars spent in the region this quarter were also in “expansion stage” companies, over seed or early stage investments, the report shows. This, too, follows a national trend of larger investments in later-stage companies, PhillipFulls said.

The Philly region is also ahead in spending for this time of the year compared to years past, the report shows. This quarter’s $433 million is up from $208 million in 2018 and $179 million in 2017. (Q3 of 2019 was an anomaly, updated from $483 million to $1.237 billion, likely because of goPuff’s secret $750 million investment.)

There was one megadeal (more than $100 million) in the last quarter — a $112 million Series C from Imvax, Inc., a Washington Square-based biotech firm. Companies in the seed and early stage of fundraising only bagged $4 million and $5 million, respectively.

And two large deals in Wilmington — including Prelude Therapeutics’ $50 million Series C — represent the majority of the city’s $104.5 million of the quarter’s VC dollars, the report shows.

While 2019 was a banner year for investments, 2020 is shaking out to be comparable to years before, with similar dollars spent in the first half of 2019 and in 2018. Like many things in the last eight months or so, the investment market has just learned to adapt to pandemic times, Phillips observed.

“Funding has increased, and a bunch of firms have raised new funds over just the last week and a half,” he said. “Things are still going gangbusters and it’s been a relief for many people in the market that just didn’t know what to expect.”

Companies: PricewaterhouseCoopers

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