With $18B already, Montgomery County businesses on track for record-high investment year

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Funding for Montgomery County companies is on track to outpace last year’s numbers by over 450%, according to data gathered by the Montgomery County Economic Development Corporation. 

Over $18 billion has been invested in 76 companies in Montgomery County, Maryland’s most populous jurisdiction, in just the first three quarters of 2021, as compared to the $4 billion that was invested in the county’s companies throughout all four quarters of 2020.  

The majority of this year’s funds — $16 billion — came from private funding, which includes mergers and acquisitions, private investment in public equity, and private equity raises. Over half of that figure comprises the $8.12 billion acquisition of ZeniMax Media, the owner of Rockville-based video game publisher Bethesda Softworks, by Microsoft in March.  

The February acquisition of Viela Bio, Inc., a Gaithersburg biotechnology company founded in 2017, by Horizon Therapeutics, a multinational pharmaceuticals firm, was the county’s second biggest acquisition of the year, at $2.65 billion. 

According to MCEDC CEO Benjamin Wu, companies in the life sciences, which have long made up the county’s most prominent industry cluster, received many major investments this year. But Wu noted that several of the county’s other industries have also experienced significant growth this year. 

“What we’re pleased to see is, even though we do have our strengths in Montgomery County in life sciences, that we’re seeing the investments being made across a spectrum of different industry sectors,” he said. 

Beyond private funding, venture capital funding in the region has also already hit a record high this year, with companies raising $970 million, a 36% increase from $712 million raised throughout the entirety of 2020, according to MCEDC. In public offerings, Montgomery County companies raised over $830 million, led by Derwood-based artificial intelligence company Xometry, which produces AI-enabled manufacturing equipment and raised $302 million this year. 

One reason the county is seeing more investments this year is because the type of companies based in the area is changing. Previously, the county was primarily seen as a hub for early-stage life sciences companies working to research and develop their products, due to its proximity to the National Institutes for Health and the Food and Drug Administration.  

But now, many of those companies have experienced significant growth and reached commercialization, which has, additionally, inspired other, more established companies to move to the area. 

“What we’re seeing is that companies are looking towards Montgomery County to make investments in … the full spectrum of life sciences from research and start up to scale up to commercialized products,” Wu said. “That ability to recognize the growth and maturation of life sciences companies in Montgomery County allows for more investments.” 

The county isn’t alone in seeing a massive boom in funding this year. According to PitchBook, a database that tracks venture capital, private equity and mergers and acquisitions, 2021 has been a banner year for investments, with startups nationwide raising approximately $240 billion in venture capital in the first three quarters of the year as compared to $166 billion throughout the entirety of last year. 

As in Montgomery County, these significant increases in funding are caused in part by an explosion of “mega-deals” — PitchBook’s term for investment rounds totaling more than $100 million. Once less commonplace, the number of venture capital mega-deals in the United States this year reached 597 as of Sept. 30, making up 57.2% of capital investment nationwide. 

Three such funding rounds have taken place in Montgomery County this year; life science companies Arcellx and Sirnaomics, both based in Gaithersburg, raised $120 million and $105 million respectively, and Bethesda-based health technology company Aledade raised $100 million. The three mega-deals, collectively, make up about a third of venture capital invested in Montgomery County companies in the first three quarters of 2021.