Nine promising Triangle technology companies raised $84.2 million in venture capital funding in the first quarter, getting the year off to a solid start.
The venture capital funding total was the Triangle’s best first-quarter performance since 2011. The results also marked the region’s second consecutive upbeat quarter after a string of three lackluster or downright disappointing quarters.
“This is definitely a good sign,” said Laura Robinette, who heads the Raleigh office of accounting firm PricewaterhouseCoopers. “Starting off strong when, historically, it is a slower quarter makes me enthusiastic for the rest of the year.” The Triangle’s first-quarter results have frequently turned out to be the worst quarter of the year.
Indeed, the latest quarter was a far cry from the $163.5 million that Triangle companies raised in the immediately preceding quarter, which was the best quarter in four years. In addition, venture capital totals traditionally have varied widely from quarter to quarter because a big deal or two, or the lack of such deals, skews the numbers.
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The venture capital data being released Friday was compiled by PricewaterhouseCoopers and the National Venture Capital Association, based on information supplied by Thomson Reuters.
The three largest deals in the quarter involved life science companies that raised at least $15 million: biotechnology company G1 Therapeutics, which raised $33 million; Clinipace Worldwide, a contract research organization; and Vascular Pharmaceuticals. The Triangle has long been a hotbed of biotech companies and is the epicenter of the CRO industry.
At the other extreme, of the three software and information technology services companies that raised money during the quarter, just one raised more than $1 million.
Clay Thorp, of Durham venture capital firm Hatteras Venture Partners, said it’s never been a better time for biotechnology companies to raise money.
“If you have products in the clinic or that are about to be in the clinic in high-value markets, you are going to be able to raise significant amounts of capital,” Thorp said. Hatteras is an investor in both G1 and Clinipace.
Biotechnology companies have been doing well in the public markets, including initial public offerings, and that carries over the private sector, Thorp said.
However, the good times aren’t rolling for all biotech companies.
“It’s still extremely hard to do a brand new financing for a brand new company,” Thorp said. “There’s still very much a gap in the market” when it comes to seed funding for startups.
Start-up and early-stage technology companies, especially in the biotechnology and information technology sectors, rely on venture capital funding to expand sales and marketing efforts and develop new products. The venture capital firms provide cash in exchange for an ownership stake in the business.
As always, there were anomalies in the quarterly data. Clinipace is listed as raising $17.5 million in the quarter, not the $50 million the company announced in January.
The discrepancies arise for a variety of reasons. For example, companies may report the total dollars committed by investors but some of the funds might be contingent on the company achieving certain milestones.
Moreover, the $39.7 million recently raised from private investors by Durham’s Novan Therapeutics didn’t register in the data at all – apparently because venture capital firms didn’t participate in that deal.
Nationwide, companies raised $13.4 billion in venture capital in the first down, down 10 percent from the fourth quarter. The number of deals declined 8 percent.
Companies across North Carolina raised $114.7 million in the quarter, which ranked the state 12th in the nation. North Carolina ranked 10th in the fourth quarter and 19th in the third quarter.