North Carolina entrepreneurial companies achieved a record year for dollars invested at more than $2.7 billion in 2018, thus cashing in on a wave of increased investment nationally.

“Total capital invested in the U.S. last year reached $131 billion and buoyed global total venture capital investment to $254 billion, record-highs both domestically and internationally,” reports the National Venture Capital Association.

In the second of a two-part Q&A, Jay Bigelow, Director of Entrepreneurship for the Council for Entrepreneurial Development, talks about 2018 in North Carolina based on data gathered for its annual Innovators Report that was published on Thursday. (Here’s a link to part one.)

  • There already has been one IPO for NC this year – Precision – matching the total for 2018 (Liquidia). There are a growing number of unicorns led by Epic. Do you expect more IPOs this year?

Hard to tell. The IPO path is not for every company and with the SEC rules that allow for confidential filings many companies may do so to “test the waters”, but then end up not actually moving forward with an IPO.

Report: NC entrepreneurial companies raise record $2.75B in 2018; Epic tops list

  • So many acquisitions last year – 30 – is that good or bad news for the ecosystem?

Mergers and acquisitions are a normal course of business for entrepreneurial companies.  Clearly if there are investors in a company, they need some sort ofliquidity event to realize a return on investment.  Beyond that, some of deals (e.g. Transloc, XS Inc., Sageworks ) are very good as they represent investment in and growth of the company (albeit with a different ownership structure).

  • So far what’s your take on 2019 in terms of funding? Does 2019 have a chance to match 2018 outside of an Epic deal?

It’s too early to speculate. Historically, most investment deals are done in Q2 and Q4 of each year.

  • What in your view does it mean to NC for Epic to land such a deal after following $400M from Tencent earlier?

The list of firms that invested in NC companies in 2018 alone is very impressive. It means that the rest of the country, in fact the rest of the world, have confidence that North Carolina is a great place to invest in and grow innovative companies.

Taking a deep dive into CED’s Innovator Report: 12 questions with Jay Bigelow

  • Who are the unicorns CED has identified in NC?

We stay away from identifying companies as unicorns. Instead we track some 1,700 active companies in Tech, Life Science, Advance Materials & Manufacturing, Cleantech and Makers.

We saw 11 companies raise $50 million or more in 2018 that’s up from 2 in 2017. Clearly a significant increase.

  • Who is getting the best on investments – investors or entrepreneurs? What are term sheets and valuations looking like?

Again, it’s a two-sided marketplace. Deals only get done if both parties get something of value and are comfortable with the terms. We have certainly heard investors complain that valuations are getting too high.

At the same time we hear from entrepreneurs saying there aren’t enough investors.  Clearly for the 176 companies that raised in 2019 and the 186 institutional investors who invested, both sides found a deal that worked.