Business

Triangle startups raise $117.1 million in Q4

Phononic, a Durham company that makes solid-state cooling and refrigeration devices, raised $40 million in venture capital in the fourth quarter, the most of any Triangle company.
Phononic, a Durham company that makes solid-state cooling and refrigeration devices, raised $40 million in venture capital in the fourth quarter, the most of any Triangle company. hlynch@newsobserver.com

Propelled by four startups that each raised at least $15 million, Triangle companies raised $117.1 million in venture capital in the fourth quarter of 2016 – making it the strongest quarter of the year.

“I think it’s a great statement for our state, especially to get this number of larger deals,” said Laura Robinette, who heads the Raleigh office of accounting firm PricewaterhouseCoopers. The quarterly venture capital data was compiled by PwC and CB Insights.

For all of 2016, Triangle companies raised $354 million. That marked a 6.6 percent decline from 2015, but it was still the region’s second-best annual results since 2008.

“It was a great year,” said Robinette.

Moreover, the decline in venture capital funding locally paled compared to the 20 percent drop in venture capital funding nationwide in 2016. And the 44 local companies that raised money last year was the same number as in 2015, whereas nationally the number of companies raising venture capital fell by 16 percent.

Commenting on the national numbers, Anand Sanwal, CEO of CB Insights, said in a prepared statement that although 2016 was a tougher year compared to the “exuberant funding environment” that prevailed in 2015, it compared favorably to 2014.

The Triangle’s venture capital tallies are highly volatile because a few big deals in excess of $10 million, or the absence of such deals, can skew the totals. That worked in the area’s favor in the fourth quarter, with a quartet of big deals led by the $40 million raised by Phononic, a Durham producer of solid-state cooling and refrigeration devices.

Technology companies in rapid-expansion mode often depend on venture capital funding to develop new products and boost sales and marketing efforts.

Robinette sees the “bounce-back quarter” that the stock market enjoyed in the fourth quarter as a good sign for the local and national venture capital markets going forward.

“Usually, venture capital investing lags the public markets,” she said. “I hope that means we are up for a gangbuster Q1 and Q2 ... and we’ll continue to see the momentum.”

In the Triangle, the amount of venture capital raised in each quarter of 2016 was greater than the preceding quarter.

David Ranii: 919-829-4877, @dranii

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