Pittsburgh’s investment community continues to make sweeping strides in support of the region’s technology companies according to a new report released by Ernst & Young and Innovation Works.
“Building Momentum: Investing in Pittsburgh’s Technology Sector,” is the second annual review on regional investment activity released jointly by E&Y and IW. The report will be presented at the luncheon of the Pittsburgh Venture Capital Association at the Fairmont on March 20th.
“This shows that Pittsburgh is a good place to be to build a company,” says Rich Lunak, CEO of IW. “The quantity of investments being attracted to the region and the list of investors are very impressive too.”
Among the highlights:
In 2013, Pittsburgh attracted over $338 million in venture, angel, strategic partnership and other sources of capital to finance 148 deals.
In a comparison of benchmark regions, Pittsburgh ranked third in the number of early stage venture deals per capita behind Boston and Austin. Pittsburgh came in ahead of Raleigh-Durham-Chapel Hill, Denver and Philadelphia based on investment rounds per million residents.
While Silicon Valley remains on top in terms of attracting investment, with New England pulling in a distant second, Pittsburgh continued to outpace other benchmark regions in the mid-western regions. Regions that ranked higher—Boston, Minneapolis, Baltimore and Raleigh-Durham—did so because they have significant life sciences clusters that draw larger investment rounds, says Lunak.
Pittsburgh companies received funding from more than 120 venture firms from across the country.
A majority of funding in 2013 came from venture capital firms, $153.6 million, a drop in VC funding levels from 2011 and 2012. Angel investors continued to play an important role, contributing $63.4 million in 2013. While most VC for local deals came from outside the region, the local supply of capital is improving.
Pittsburgh continues to support a diverse range of industries. Over the last five years, 57% of those companies were IT related and 25% were life sciences or healthcare related.
Between 2009 and 2013, 34 exits occurred among Pittsburgh technology companies valued at more than $3 billion. Exits in 2013 included BodyMedia, acquired by Jawbone, BPL Global, acquired by Qualitrol as well as some that were unreported. The ExOne Company in North Huntingdon sold shares in an IPO raising $95 million in 2013.
During the past decade, Pittsburgh’s supply of local venture capital decreased from 2006 to 2011 as a result of a decline in the number of local venture firms and other factors. In 2012, this trend began to reverse with the launch of several new funds including Birchmere’s fourth fund and PLSG’s Accelerator Fund. Draper Triangle and IW closed on new funds in 2013 as well.
The region’s universities continues to serve as a major driver of economic growth, providing a stream of strong companies and talent.