Baltimore VC funding cools off in Q3, but 2021 remains on record pace

Editor’s note: This quarter’s figures may vary slightly, as some deals aren’t accounted for until weeks after quarterly VC reports are published.

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When it comes to venture capital activity in the region, the second half of the year got off to a slower start than the first.

That’s shown in data from the latest PitchBook-National Venture Capital Association Venture Monitor, which is prepared in association with Silicon Valley Bank and Affinity.

While VC activity has been up around the country, the third quarter locally continued a trend of up-and-down swings from quarter to quarter that observers have long noted in the region.

For the Baltimore metro area, $72.15 million flowed to 13 companies in the third quarter of 2021. That was down in both dollars and number of deals from the previous two quarters, which each posted funding totals of about $252 million and $180 million, respectively.

In Maryland, venture funding was about $379.4 million into 30 companies. That was still among the highest funding quarters since 2014, but is down from the highs of the first half of the year, which posted quarters of about $680 million and $540 million respectively.

In Baltimore, some of the largest deals we reported on over the last quarter included a $32 million Series B round for b.well Connected Health (which isn’t noted in the Pitchbook-NVCA data), a $20 million Series C for Real Time Medical Systems and a $9.5 million Series A for cloudtamer.io. We also reported on an $8.5 million Series A for Salesforce-based mobile services company Youreka Labs, a $3.5 million investment round for Sonavi Labs and $1.5 million for AI-based speech therapy company TikTalk2Me.

In Maryland, notable deals included a a $105 million for Gaithersburg-based biotech company Sirnaomics, a $7.4 million deal for UMD spinout Medcura and a $1 million seed round for insulation company Liatris.

In exit activity, a trio of Baltimore-based companies were acquired in deals reported this quarter: personality assessment company Traitify, biotech company Circulomics and EventRebels.

When it comes to Baltimore-area venture funds raising money, the report shows that three funds raised $417.67 million. That helped Maryland reach a total of $574.67 million across six funds, per the report.

Nationally, $82.8 billion was invested across an estimated 3,518 deals, according to the report. The annual total of $238.7 billion far surpasses the record of $166.4 billion set in 2020. It means venture capital activity has already broken an annual record set just last year, and it’s only three quarters in.

Maryland is on a similar pace, with nearly $1.6 billion collectively raised this year, totaling more than the $1.26 billion raised in 2020, per the report. Baltimore stands at $506 million for the year, putting it at last year’s total of about the same, per the report.

Venture has been on a high during the pandemic, but the quarter offers one data point that there could be a cooling off period. How it plays out remains to be seen.

“The pace of activity across all facets of the U.S. VC ecosystem in 2021 has been astounding, with many annual records already shattered before the fourth quarter even started. Existing companies and a healthy pipeline of new startups have found investors — especially nontraditional investors — are eager to deploy the record dry powder and write ever larger checks,” said John Gabbert, CEO of PitchBook, in a statement. “However, it’s entirely possible that LPs are hitting the upper limits of their allocation to venture and could potentially slow or plateau in coming quarters. That said, while the IPO market remains open, we anticipate distributions will continue to flow back to LPs at record rates encouraging re-allocation.”

It’s also worth remembering that these are topline numbers. Further breakdowns could show a difference between seed and later-stage funding, which is something to watch for those seeking to build a community of companies able to receive funding at all levels. UpSurge Baltimore broke down the activity at various stages in recent years in a report issued in the spring.