CED’s Innovators Report shows increase in big deals outside the Triangle,
pacing toward a billion-dollar fundraising year
DURHAM, NC, August 24, 2017 -- The Council for Entrepreneurial Development (CED) today released a mid-year update to equity fundraising totals through its digital Innovators Report. CED’s Innovators Report tracks funding activity in North Carolina for technology-based entrepreneurial companies.
The mid-year update released today shows that in the first half of the year, 93 North Carolina entrepreneurial companies in the life science, technology, cleantech and advanced manufacturing and materials sectors collectively raised nearly $769 million in funding through 107 equity investment deals. This includes venture capital, angel, corporate, growth equity and strategic investments.
How does funding compare to 2015 and 2016?
Total funding for the first six months of 2017 is over $300 million higher than the same time period in 2015 and 2016. This difference can be mainly attributed to one major deal this year, Charlotte-based AvidXchange which announced a $300 million raise in June.
The second quarter of 2017 was the highest grossing quarter since the third quarter of 2015, which also included a big deal for AvidXchange ($225 million in August of 2015).
“In 2015, North Carolina entrepreneurs had a banner year, raising over $1 billion in funding. Given the pacing of this year and big deals driving up the dollars, we are on track to break a billion once again,” said Miriam Andrews Wilson, CED’s Vice President of Investors Relations.
Where is the money going?
At just halfway through the year, Charlotte saw a total of $531 million raised across 14 companies. Four of the top five tech deals in North Carolina were for Charlotte-based companies including the biggest deals this year: AvidXchange ($300 million) and SmartSky Networks LLC ($176 million). In comparison, during the full 2016 calendar year, Charlotte had 16 companies raise a total of $52 million.
Typically, we see over 75% of the dollars in North Carolina going to Triangle-based companies. In 2017 so far, Charlotte is bringing in the bulk of dollars, but the Triangle accounted for two-thirds of the deals. Durham had the most deal activity of any city in the state with 36 deals, and Raleigh came in second with 20 deals.
What type of companies are being funded?
With most of the big deals going to tech companies, the tech sector is leading this year so far with $595 million raised, compared to life science companies raising $140 million. Funding for advanced manufacturing and materials companies lagged this half ($10.5 million), while cleantech funding is almost double its average range with $23 million in total funding.
For companies in the tech industry, the top 5 deals accounted for $539 million, or 90% of the total funding for that sector. Most of the tech deals were under $1 million each. So far this year, the median deal for a tech company has been around $500,000.
In the life sciences, Benson Hill Biosystems, Inc. had the biggest deal at $25 million. Most of the life science deals were less than $5 million. So far this year, the median deal for a life science company has been around $1.9 million.
In the first half of 2017, 93 North Carolina entrepreneurial companies raised nearly $769 million in funding through 107 equity investment deals.
First Half of 2017 by Quarter:
- Q1 - $352,516,298 through 55 equity deals
- Q2 - $416,427,991 through 52 equity deals
First Half of 2017 by Sector:
- Tech - $595,491,121 in 48 companies through 50 equity deals
- Life Science - $139,681,057 in 32 companies through 42 equity deals
- Cleantech - $23,210,557 in 5 companies through 6 equity deals
- Advanced Manufacturing and Materials - $10,561,554 in 8 companies through 9 equity deals
North Carolina companies attracted equity investments from 68 unique funders during the first six months of 2017.
It’s no surprise that North Carolina had the highest count of investors (18) involved in deals of any state in the U.S. While California (8) and New York (9) continue to be next in line, we are seeing a significant increase in dollars from the Midwest. Eleven (11) investors from states in the Midwest have participated in 18 deals in 2017, primarily in AgTech companies.
Eight (8) North Carolina-based entrepreneurial companies were involved in exit activity in the first half of 2017. Two (2) companies experienced IPOs: Dova Pharmaceuticals (DOVA) and G1 Therapeutics (GTHX). Six (6) companies were involved in acquisitions. Those transactions were:
- 1st Order Pharmaceuticals, Inc. was acquired by Xenon Pharmaceuticals
- BioSignia, Inc. was acquired by Orthus Health
- Blogads was acquired by Racery
- DILIsym was acquired by Simulations Plus
- KnowledgeTree Inc. was acquired by SAVO Group
- Polyglot Systems Inc. was acquired by First Databank Inc.
CED Innovators Report: www.cednc.org/innovatorsreport
Slides: CED Innovators Report 1H 2017
CED’s proprietary Innovators Report tracks data not readily available elsewhere. CED leverages its deep relationships with companies and investors, and its partnerships with organizations and sources such as the National Venture Capital Association, the North Carolina Biotechnology Center, Ernst & Young and PricewaterhouseCoopers MoneyTree Report to gather, analyze and report these data. In addition to absolute numbers, the report uncovers trends in the entrepreneurial sector.