After a strong second quarter, D.C. venture capital saw some major drops in Q3.
VC activity in the region — which includes cities spanning from Northern Virginia to Baltimore — for the most recent quarter totaled $368 million into 36 deals, according to data shared in a recent PwC/CB Insights MoneyTree report. This is a 90% decrease in dollars and a 28% decrease in the number of deals compared to Q2 of this year. The average deal size in the region for Q3 was $11.1 million, a drop from the average deal size in Q2, which was $14 million.
Brad Phillips, a director in PwC’s Emerging Company Services practice, told Technical.ly that part of the reason for the drop in Q3 was because Q2 had Pie Insurance’s $127 million mega deal, which was only the fourth “mega deal” ($100 million and up) the region had seen since 2017; Q3 didn’t have any mega deals in the D.C. region. Also, there was a “significant reduction” in the number of deals valued at $30 million or higher this quarter.
The region is at $1.46 billion in investments for the year so far.
The top sectors for the D.C. region were internet and healthcare. For companies in D.C. proper, $65 million went into eight deals. When ranked against the nation, the District was ranked #22 in number of deals and #26 in amount of dollars raised. Maryland ranked #13 in number of deals and #15 in amount of dollars while Virginia ranked #14 and #23 respectively.
Some of the big tech deals in the region for Q3 include Xometry’s $75 million investment, a $16 million seed round for Class for Zoom via ClassEDU, Aquicore’s $14 million Series A and Till’s $8 million seed round.
Nationally, $36.5 billion was invested into 1,461 deals, which was the second highest quarter ever for dollars and the strongest third quarter in six years; the highest level of investment ever was Q4 of 2018. Seed-stage deals rose for a second quarter overall. Three states accounted for roughly 70% of venture capital in Q3: California, New York and Massachusetts.
Phillips said he’d heard that companies may have been having better luck contacting investors since they are able to communicate via Zoom. This is, of course, easier than traveling to meet investors face-to-face, and it allows for more meetings.
“It looks like Zoom fatigue is less exhausting than jumping on a plane,” said Phillips.
P.S. Looking for funding yourself? Consider reaching out to some of the 75+ VC firms based in the DMV region.