A broad range of investors invested nearly $1.2 billion in North Carolina’s entrepreneurial companies last year – more than double the amount invested in 2014 and nearly triple that of 2013.
Triangle companies with high-growth potential accounted for 78 percent of the 191 investment deals statewide and two-thirds of all the funding – $811.9 million in all. That’s 52 percent more than the amount raised by entrepreneurial companies across all of North Carolina in 2014 and 57 percent more than the $518.4 million raised by Triangle companies that year.
“2015 was really a banner year for North Carolina entrepreneurs by every single measure,” said Joan Siefert Rose, president and CEO of the Council for Entrepreneurial Development, a nonprofit support group for entrepreneurs based in the Triangle.
CED compiled the investment data and released it Thursday at a press conference held at The Frontier, a Research Triangle Foundation building that offers free working space for entrepreneurs and others as well as private office space available for lease.
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Unlike surveys that focus only on the amount of venture capital raised by startups and other early-stage companies, CED’s Innovators Report tallies investments from a number of sources – including angel investors, corporations, growth equity firms and family offices, which are businesses that manage money for wealthy families.
Of the $1.18 billion raised across the state last year, $507 million, or 43 percent, came from sources other than venture capital, said Dhruv Patel, director of investor relations at CED. That’s especially significant because Triangle entrepreneurs often bemoan the dearth of venture capital firms based in the Triangle.
That said, venture capital funding alone jumped 93 percent in 2015, versus a 16 percent increase in venture capital funding nationwide.
Early-stage companies, especially biotechnology and information technology companies, depend on outside investors to fund product development and ramp up sales and marketing.
Big deals helped drive the overall 2015 funding totals much higher. Last year 19 North Carolina companies raised more than $15 million, up from six such deals in 2014 and five in 2013. CED began tracking overall funding in 2013.
Two companies raised more than $100 million: AvidXchange, a Charlotte technology firm that attracted $225 million, and the RTP-based biotechnology company Humacyte, which raised $150 million.
Paul Boyer, Humacyte’s chief financial officer, said none of the company’s funding to date – which includes $63 million in seed funding as well as the $150 million it raised last October – has come from venture capital firms.
Humacyte didn’t even approach any venture capitalists for its latest funding, Boyer said. Instead, it targeted family offices around the globe – including Southeast Asia and the Middle East as well as Europe and the United States.
The company ended up talking to 33 family offices and 27 of them became investors, including one that invested $20 million.
“We’re very fortunate because we have a very compelling story,” Boyer said.
That story includes “pretty exciting” test data for the company’s experimental treatment for patients who are undergoing hemodialysis as a result of kidney failure. Humacyte expects to begin Phase 3 trials for that treatment – the final round of clinical testing needed before seeking regulatory approval – in March.
Tech companies across the state raised $516.3 million last year, up 97 percent. Life science companies, which include drug makers and medical device businesses, raised $583.8 million, up 213 percent.
Past performance, however, is not a reliable indicator of the future.
“We don’t have a crystal ball to say how 2016 is going to be,” Patel said.