2018: A Record-Setting Year As North Carolina Companies Bring in Over $2.7 Billion in Venture Funding
CED’s Innovators Report provides a view into the data supporting
CED’s Connections to Capital, a strategic investor-entrepreneur matching service.
RESEARCH TRIANGLE PARK, NC, March 28, 2019 – North Carolina-based high-growth companies raised a record-setting amount of venture funding last year, collectively totaling $2,748,989,918 raised, a 144% increase from 2017. All told, 176 companies completed 207 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 2018, the mean deal size was $13.4 million ($7.3mm as adjusted for the removal of the Epic Games transaction) as opposed to $5.0 million in 2017.
“Having large, noteworthy fundraisings such as those completed by Epic Games, Precision Biosciences, and Humacyte certainly spotlights the region as a great place to start and grow a high-tech business,” says Ravila Gupta, CEO – CED. “Entrepreneurs continue to be a great source of economic growth for our state and these large investments in local companies help fuel that momentum,” she added.
Epic Games’ $1,250,000,000 deal was the single largest venture fundraising in the entire United States in 2018 and the single biggest raise of its type in North Carolina history. Participating in the iconic transaction were well-known leaders of the private investing community, including Silicon Valley’s Kleiner Perkins and private equity giant KKR & Co. Notwithstanding the outlier amount raised by Epic Games, North Carolina totaled nearly $1.5 billion in 2018, the most since the turn of the century preceding the dot-com bubble.
Sector Breakdown: The Return of Life Science
Although historical trends show near annual parity between both sectors, two years ago in 2017, tech investments surpassed those made in life science by over $500 million. Last year, however, momentum began shifting back in other direction.
Funding in life science increased by 171% to $730,471,131, the most in over five years. Tech also saw a 133% increase to $1,831,513,058, buoyed by the Epic Games funding ($581,513,058 without Epic Games). There were 104 Tech deals made, while Life Science saw 76 deals. Finally, the average deal size in Life Science was $9.6 million, while the average Tech deal (not including Epic Games) was $5.6 million.
After the Epic Games deal, three of the next four largest deals were in the life science space, including Humacyte ($150,000,000), Precision Biosciences ($110,000,000 across two closings) and again Humacyte ($74,999,980).
Makers companies raised $56,920,038 led by Charlotte’s Protective Technologies ($38,051,775), and cleantech companies raised $34,165,365 buoyed by Eco-Site ($30,000,000). The advanced manufacturing and materials sector returned to its 2016 levels in jumping over 300% from last year, raising $95,920,326 as Durham’s Prescient closed on $50,000,000 in funding.
North Carolina Drawing National Attention
Companies raised capital from a wide array of institutional funders, including investors throughout all regions of the country, and internationally. Of the 186 total institutional investors who participated in North Carolina fundraisings, 75% were not based in the southeast, with traditional hubs California (40) and New York (22) leading the way. North Carolina also had nearly 12% of its investors from foreign institutions, the most coming from China (7).
“Seemingly every week I speak with a fund that is not based here, but wants to see deal flow from our local companies,” says Hunter Young, CED’s Connections to Capital Manager, “They know we have something special going on here and do not want to miss the opportunity to participate.”
Additionally, while traditional venture capitalists and growth equity funds made up nearly 65% of the institutional investors, almost 25% of the funders were corporate/strategic, highlighting the increasing prevalence of venture investing as a dedicated focus for larger companies.
Young Companies Continue To Grow
For the 4th year in a row, nearly 150 or more North Carolina companies raised early capital (seed and series A rounds less than $5 million) that will allow them to further develop product and begin to scale with customers.
“It is really important for long-term economic growth that we have a sustaining ecosystem,” says Jay Bigelow, the Director of Entrepreneurship at CED. He added that, “These early stage deals help propel the companies we will all be talking about 5- 15 years from now.”
For information on Connections to Capital service, click this link.
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 Pitchbook, the National Venture Capital Association, the North Carolina Biotechnology Center, Small Business Technology Development Center (SBTDC), NC IDEA, 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.
CED connects entrepreneurial companies with high-value resources to accelerate business growth. CED services and programs (including Connections to Capital, Venture Mentoring, and signature conferences) empower member companies to go further faster. Partners of CED are fueling tomorrow’s success stories by investing in today’s ecosystem.
CED is celebrating its 35th year of services to North Carolina Entrepreneurs. The original 15 business leaders began CED with the ideas of encouraging the formation and development of businesses in North Carolina. Working both directly and indirectly through workshops, programs, conferences, aligning the ecosystem and lending support when needed, CED has played an important role as a catalyst for change.