RESEARCH TRIANGLE PARK – Investments in North Carolina startups in 2020 rivaled the heady dot com years of the 1990s, hitting $3.6 billion for the year, according to the Pitchbook NVCA Venture Monitor.
NC ranked sixth for the total amount of venture investments raised in 2020, but its numbers are skewed by the $1.8 million raised by Cary-based Epic Games, among the most raised nationally. Epic benefitted from the popularity of its big hit Fortnite and its Unreal Engine for game-building as video games became one of the pandemic escapes for many people stuck at home. Video games posted record sales worldwide in 2020.
The state’s performance was part of a banner year nationally for startup exits, venture investments, and fund-raising, according to the report. The overall venture capital market was buoyed by a resurgence in the IPO market. Airbnb and other prominent companies launched successful IPOs, which encouraged further investments down the line.
Although California still dominated in 2020, Pitchbook’s report suggests the Bay Area which includes Silicone Valley, will see its portion of the total VC raised drop to less than 20 percent for the first time. Other tech hubs, such as the Research Triangle, Austin, and Nashville will benefit as startups and tech companies seek greener – and less expensive — places to do business.
VC’s banner year: US set records for exit values, investments, fund-raising in 2020
The Research Triangle nabbed 76 percent of investments in the state in 2020 and remained in the top 10 nationally. Per capita, the Raleigh-Durham area is number 3 behind only Silicon Valley and Boston, Kyle Stanford, an analyst for PitchBook, told the Raleigh News & Observer.
In NC and nationally, tech startups gained traction as the pandemic forced consumers and businesses alike to rely on technology for entertainment, shopping, remote work, meetings, and deal-making. For many tech companies, including startups, that was either just business as usual while demand for tech products, services, and support ballooned.
With the pandemic driving vaccine development and healthcare concerns, biotech and pharma has a record-setting year. NC is consistently in the top five (or higher) biotech hubs nationally. Fintech, another growing cluster in NC also saw a record year with deals exceeding $20 billion nationally. Both trends benefitted NC startups.
Drilling into the state’s details, it’s easy to see the effect of the Epic Games raise in Q2 2020, in which 60 NC companies raised a record 2,142.1 billion, dwarfing all but Q2 in 2018, in which 55 firms raised $1,497.92 billion.
Exits in Q4 and Q3 2020 exceeded those of previous years by a substantial amount. In Q3, NC exits of only two companies totaled $2.59 billion, and in Q4, were $4.032 billion for 5 exits. The closest previous years came were two in the $700 million-plus range.
Durham had $4 billion generated by only 3 exits in Q4 2020, with the only comparable quarter Q4 in 2015, with one deal at #2.1 billion.
Raleigh had two exits totaling $32 million, not a particularly stellar quarter compared to previous years.. It also saw two exits that totaled $27.5 million in Q1. The Charlotte Gastona MSA saw no exits of note in 2020.
