North Carolina-based high-growth companies raised a record-setting amount of venture funding last year, collectively totaling over $3.4 billion raised, a 25% increase over the previous record in 2018 and a 130% increase over 2019. All told, 187 companies completed 223 deals across the Tech, Life Science, Cleantech, Makers, and Advanced Manufacturing and Materials industries.
In alignment with national trends, North Carolina companies also raised larger deals on average, albeit across slightly fewer total deals. In 2020, the average deal size jumped to over $15 million while the median deal size stayed just below $2 million.
“Only 5 years ago $1 billion in equity investment across the state was considered a major accomplishment. However, today even if you normalize and remove the major billion-dollar fundraisers from Epic Games, the baseline level of investment across North Carolina is now approximately $1.5 billion, proving the dynamic and growing entrepreneurial atmosphere that currently exists,” said Hunter Young, Head of Capital at CED.
Unlike 2019 which was nearly in balance between sectors, Tech dominated 2020 in North Carolina with nearly 80% of the investment dollars. The $1.8 billion raised by Epic Games and $450+ million from AvidXChange, however, are comparatively large outliers and skew the data somewhat. Sector verticals have become more diverse each year with large investments into gaming, fintech, e-commerce, telecommunications, healthcare IT, consumer goods, agtech, and cybersecurity among many others. As for the Life Science industry, Shattuck Labs raised a $118 million crossover round early in the year prior to their IPO.
In most years, the majority of deal announcement and closing activity happens at the end of Q2 and Q4, however, in 2020 the biggest period was Q3. With the first shocks of the COVID-19 pandemic occurring at the beginning of the year, most investors initially focused on supporting their current portfolio companies. However, with record dry powder on hand that needed to be put to work, many investors regained comfort in closing new deals that had at this point been pushed into the second half of the year.
DEALS COVER A WIDE AREA WHILE TRIANGLE COMMANDS DOLLARS
Nearly 80% of the total dollars in North Carolina were invested into Triangle companies, in line with the majority of the activity happening in the area. However, less than 70% of the total number of deals were in the Triangle, showing the enormous impact that the large fundraising from Epic Games has on the data. Multiple large deal closings by AvidXChange supported the Charlotte area with nearly 20% of the state’s dollars. Outside of those two large metro areas, Apiture of Wilmington had the largest fundraise with their $20 million Series A.
North Carolina had the most institutional investors participate in rounds in recent record as over 200 funders supported NC companies, including over 40 from California and 27 from New York. In the global lens, the state continues to grow in interest to international corporations and funds with at least 20 foreign-based entities investing here from 12 countries. Following global trends, aside from venture capital and growth equity funds, there were more non-traditional venture investors participating in late-stage rounds in North Carolina to get earlier direct exposure to record recent tech growth, including asset managers, pension funds, and hedge funds.
“The ability of our entrepreneurs to access capital is strong. A proof point is not just the number of deals and size of the rounds, but that 40 California-based funds invested in North Carolina Companies. We can certainly use additional very early-stage risk capital to support these companies in the beginning, but those that can scale can find the funding they need from investors not based here,” said Jay Bigelow, Head of Entrepreneurship at CED.
MARKETS WERE OPEN FOR LIQUIDITY EVENTS
Three North Carolina companies took advantage of conditions and entered the public markets via IPO: PPD, nCino, and Shattuck Labs. nCino had an exceptionally strong opening, surging more than 150% on its first day of trading. Strategic buyers and financial sponsors also looked to the state more than any time in recent memory as there were 33 combined mergers, acquisitions, and buyouts.
View the 2020 Innovators Report here: https://cednc.org/give/investors/innovators-report/