Triangle companies raised $378M in venture capital in 2015

Promising Triangle technology companies raised more than one-third of a billion dollars in venture capital funding in 2015 — the region's best showing since 2008 — despite so-so fund-raising results in the fourth quarter.

For all of 2015, 44 Triangle companies raised $378.8 million in venture capital. That dollar total is up 43 percent from the 39 companies that raised $265 million in 2014.

“2015 was a terrific year for companies raising money,” said Dhruv Patel, director of investor relations at CED, a Triangle-based support group for entrepreneurs.

In the fourth quarter, 10 Triangle companies raised $50.9 million in venture capital, according to data being released Friday. The data was compiled by PricewaterhouseCoopers and the National Venture Capital Association, based on information supplied by Thomson Reuters.

The fourth-quarter results, although middling by recent standards, were easily the lowest in 2015. It was the lowest quarterly total since 10 companies raised $47.4 million in the third quarter of 2014.

For the first time in memory, no life science companies – biotechnology and medical device companies – raised any venture capital in the fourth quarter. The Triangle is a biotechnology hub, and life science companies usually are a major driver for the region’s venture capital totals.

Patel noted that venture capital numbers don’t provide a complete picture of the funding landscape for startups and other early-stage companies. If you include funding from other sources that aren’t always reflected in the venture capital data – such as funding from angel investors and corporations – then the fourth-quarter funding totals were “very strong,” he said.

Most notably, Humacyte, a biotech company based in Research Triangle Park, by itself raised $150 million in October – three times the amount of venture capital raised by local companies in the quarter. Humacyte’s funding wasn’t included in the venture capital tally.

“This is a really good year if you just focus on venture capital, but it’s a really, really good year if you look at the broader (funding) activity,” said Laura Robinette, who heads the Raleigh office of PricewaterhouseCoopers.

Most young technology companies rely on venture capital funding to boost sales and marketing efforts and develop new product. Venture capital funds obtain a piece of the business in exchange for their investment.

Four of the 10 Triangle companies that raised venture capital in the fourth quarter were software companies and another four were information technology services companies.

“Over the last two years, the tech sector has been very active,” Patel said.

Most of the deals were relatively small, with just two of them exceeding $3 million: digital advertising technology company Netsertive raised $24 million and sofware startup Pendo raised $11 million.

Nationwide, the $58.8 billion in venture capital raised in 2015 was the second-highest in the last 20 years.

In the fourth quarter, venture capital firms invested $11.3 billion across the country in 962 companies in the fourth quarter, down 32 percent in dollars and 16 percent in companies compared to the third quarter and the smallest amount invested since the third quarter of 2014.

Patel said that, based on his conversations with venture capitalists, he doesn’t see any signs that funding will slow down in 2016.

Robinette said that although she’s “cautiously optimistic,” it really too early to tell what the immediate future holds in light of the stock market’s recent woes.

“I’m hoping that it’s very temporary in nature and we’ll see a quick rebound here later in January,” Robinette said. “When the stock market is down, I think you just have a much more cautious investor pool.”

This story was originally published January 14, 2016 at 7:01 PM with the headline "Triangle companies raised $378M in venture capital in 2015."