RESEARCH TRIANGLE PARK – Lifted by a $1.25 billion investment by Cary-based Epic Games, North Carolina entrepreneurial companies raised a record $2.749 billion in 2018, according to a new report.

“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,” said Ravila Gupta, CEO of the Council for Entrepreneurial Development, which released its 2018 Innovators Report. “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.

The Epic deal vaulted NC capital raising to a level not seen before.

“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,” CED noted.

“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.”

Yet even without the Epic deal, North Carolina firms had a good year.

“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,” the CED said.

Inside the numbers

Breaking down the report by sectors, CED reported:

  • Technology: $1,831,513,058
  • Life Science: $730,471,131
  • Advanced Manufacturing & Materials: $95,920,326
  • Cleantech: $34,165,365
  • Makers: $56,920,038

Some more facts and figures:

  • Total deals, 207
  • Companies involved, 176

Deals by categories:

  • Tech: 104 (Companies: 90)
  • Life Science Deals: 76 (Companies: 63)
  • Advanced Manufacturing & Materials Deals: 10 (Companies: 9)
  • Cleantech Deals: 7 (Companies: 5)
  • Makers Deals: 10 (Companies: 9)

In deal action, the report cited 30 mergers and acquisitions and one IPO (Liquidia).

Sources for the report included SEC Filings, media coverage, CED partners, and the entrepreneurs themselves. Data partners included PitchBook,

National Venture Capital Association (NVCA), North Carolina Biotechnology Center, Small Business Technology Development Center (SBTDC),
Groundwork Labs NCIDEA, Ernst & Young, PricewaterhouseCoopers, MoneyTree and SBIR.gov.

The report can be read online.

Here is the full press release:

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.”