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Report: Venture capital invests aggressively in Md. startups

(Alexstar / Depositphotos.com)

(Alexstar / Depositphotos.com)

Venture capital-backed startups in Maryland continued to attract strong investment dollars during the year’s second quarter as the state is poised for one of its best years for investment activity.

Startups raised $247 million last quarter, less than the standout previous two quarters that raised more than $400 million each, but still one of the best quarters the state has posted over the last decade, according to the quarterly MoneyTree Report from PricewaterhouseCoopers LLP and CB Insights.

“Generally a good story for Maryland,” said Brad Phillips, director of emerging company services at PricewaterhouseCoopers. “Certainly if the current rate of investment continues we’ll have more dollars invested in the state than we did last year.”

State startups have already raised 72 percent of the funds they did last year, when $903 million represented one of the two best years for investment over the previous 15 years.

While the $247 million raised last quarter was less than the $405 million invested in the first quarter of the year, it was strong growth over last year’s second quarter. Last year, startups raised $102 million in the second quarter.

While previous strong quarters have been buoyed by megadeal rounds, defined as rounds of more than $100 million, this quarter had no megadeals. The top deal, $78 million for Fulton firm IronNet Cybersecurity, was one of the top 5 deals in the U.S. in the cybersecurity sector.

While the second quarter lacked the dollar volume of the first, it did see more deal activity. There were 23 deals last quarter compared to 20 in the year’s first quarter and 17 in last year’s second quarter.

More deals, even lower dollar deals, represents a good sign because investors are interested in the smaller and newer companies that could attract the next megadeal, Phillips said.

“You want a lot of dollars in the region because that lets companies expand and hire people,” he said. “You also like to see the smaller deals because these are all of the ‘experiments’ happening throughout the state where somebody has said, ‘Yes I agree with the concept and the market.’ You need that.”

The gains across Maryland also extend to Baltimore.

In 2013 and 2014, the MoneyTree report tallied no deals in the city. After the second-quarter report, there have been 17 deals and nearly $158 million invested already in 2018.

“It wasn’t too long ago where it would be a surprise to have an investment in Baltimore,” Phillips said. “Baltimore has had a good few quarters in a row here.”

It was a strong quarter for investment nationally, as well. Venture-backed startups generated $23 billion in funding.

“That’s the largest number of dollars for a quarter in the history of the MoneyTree report,” Phillips said. “It was a monster quarter nationally.”

Artificial intelligence and finance technology sectors had great quarters, posting double-digit increases in deals and investment.

There were also 45 megadeals, though megadeal financing fell as a percentage of the total amount invested.

Maryland placed 11th among states for total number of deals and tenth for total dollars invested in startups.

Maryland’s top deals for 2Q of 2018:

Company City Sector Amount
IronNet Cybersecurity Fulton Computer Hardware & Services $78,000,000
WindMIL Therapeutics Baltimore Health care $32,530,000
Sirnaomics Gaithersburg Health care $25,000,000
CloudBolt Software Rockville Computer Hardware & Services $23,000,000
Immuta College Park Software (non-internet/mobile) $20,000,000
Quantum Xchange Bethesda Computer Hardware & Services $10,000,000
Pixelligent Technologies Baltimore Electronics $7,600,000
Lifesprout Baltimore Health care $6,500,000
Blackpoint Holdings Ellicott City Software (non-internet/mobile) $6,000,000
Insilico Medicine Rockville Health care $6,000,000

Source:  PwC MoneyTree Report


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