North Carolina Entrepreneurs Raise $175 Million in Q3 2016

Total funding in 2016 surpasses $600 million

DURHAM, NC, November 8, 2016 — The Council for Entrepreneurial Development (CED), the largest and longest-running entrepreneurial network in the nation, today released the third quarter equity fundraising totals through its digital Innovators Report. CED’s Innovators Report tracks technology-based entrepreneurial activity in North Carolina.

During the third quarter, 59 North Carolina entrepreneurial companies in the technology, life science, advanced manufacturing and materials and cleantech sectors collectively raised more than $175 million in funding through 62 equity investment deals. This includes venture capital, angel, corporate, growth equity, family office and strategic investments.

“Fundraising momentum continued in the third quarter, putting North Carolina entrepreneurs on pace for another strong year for raising capital,” said CED President and CEO Joan Siefert Rose. “The past three months are another good example of investors seeing strong companies, with good ideas and good valuations, in North Carolina.”

The third quarter featured a marked increase in deals (62) nearly doubling the deals completed in the first quarter of the year (33). Total cumulative funding for 2016 has topped $600 million, which is more than all the equity funding raised in 2014 ($532 million) and almost double what was raised in 2013 ($396 million). Life Science funding continues to lead the way in 2016, with $84 million raised in the third quarter, compared to tech companies raising $46 million. Funding for advanced manufacturing and materials companies seemed to rebound in the third quarter ($36 million), though the majority of that funding was due to one deal for Phononic.

Funding Breakdown

In Q3 2016, 59 North Carolina entrepreneurial companies raised $175,744,574 through 62 equity deals. Those totals, broken out by sector, are as follows:

  • Tech: 27 companies completed 30 deals, bringing in $46,326,266
  • Life Science: 21 companies completed 21 deals, totaling $84,740,801
  • Advanced Materials and Manufacturing: 9 companies completed 9 deals, netting $36,593,237
  • Cleantech: 2 companies completed 2 deals, raising $8,084,270.

A majority of the deals in the third quarter were under $5 million. Twenty (20) of the 62 deals were for $1 million to $4.9 million and 32 of the third quarter deals were for less than $1 million.

“We saw a healthy number of deals in the third quarter, but the funding per deal is relatively low,” said Miriam Wilson, CED’s Vice President of Investor Relations. “So far in 2016, companies haven’t landed many deals valued at $30 million and above, which is holding down the total compared to 2015, but the amount of activity is a positive sign and the cumulative total this year has already surpassed that of 2014.”

Investor Activity

North Carolina companies attracted equity investments from 42 unique institutional funders during the third quarter of 2016. The top locations for investors were:

  • North Carolina, 13
  • California, 5
  • China, 5

Nine (9) international investors participated in deals. These investors are based in China (5), the United Kingdom (2), Ireland (2) and Canada (1).

Exits

Ten (10) entrepreneurial companies were involved in exit activity in Q3 2016. Patheon (PTHN) and Novan (NOVN) executed IPOs during the quarter.

The M&A activity included:

  • Algynomics Inc. was acquired by Proove Biosciences
  • Avelist, inc was acquired by The Muse
  • Bamboo Therapeutics was acquired by Pfizer
  • Eye Care Alliance was acquired by Walman Instruments
  • kSep Systems was acquired by Sartorius Stedim Biotech
  • SC Data, Inc was acquired by COR365 Information Solutions
  • Sensus was acquired by Xylem
  • WebAssign was acquired by Cengage Learning

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, PitchBook, 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.

CED Innovators Report: www.cednc.org/innovatorsreport

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