CHAPEL HILL – The UNC Kenan-Flagler Entrepreneurship Center and the Kenan Institute of Private Enterprise will co-host next week’s VC University, a partnership program on venture finance between the University of North Carolina at Chapel Hill (UNC-CH) and the National Venture Capital Association (NVCA).

The program, a three-day intensive will earn participants a certificate, was designed by the NVCA along with Startup@BerkeleyLaw and Venture Forward in 2019, and UNC-CH will be the third university to host the program.

Despite a slow start in the first and second quarters, with regard to invested venture capital, 2020 was a record year for venture capital, nationally, said NVCA president and CEO Bobby Franklin in an interview with WRAL TechWire.

“Activity in the VC industry is robust,” said Franklin.  “2020 was a record year for VC as measured by capital invested and fundraising, and the first quarter data for 2021 shows no slowdown in activity.”

North Carolina sees 410% increase in VC capital 2016 to 2020 – but what’s the full story?

Initially, said David Sabow, head of life science and technology banking at Silicon Valley Bank, in an event hosted by the Research Triangle Regional Partnership in early June, “investors were very slow deploying capital over Zoom, as we had the stark realization that this was not going to be weeks or months, but a year, year plus, then capital started to move more broadly, and we saw a dispersion, a democratization of investment beyond the hubs that was really enabled by Zoom and people getting more comfortable with the idea of building that initial trust, that relationship virtually.”

While venture capitalists became more willing to build relationships and consider investments outside of what Sabow called the “core hubs,” leading to investments in companies across the United States, the uptick in remote or virtual meetings did have a “flight to safety” effect from those who choose to invest in venture capital funds, as limited partners appear, based on the data, to be “staying with established fund managers with whom they already have existing relationships, rather than taking a risk on new managers,” said Franklin.

North Carolina is attracting attention, too, said Franklin, and the trends that have appeared nationally appear to be occurring in the Tar Heel State as well—a move toward ever-larger deals.

“Elevated public markets and associated strong public valuations may play a role in late-stage investments with investors looking forward to a listing on public markets, whether through a traditional IPO or via one of the many SPACs that have formed in the past year or so,” said Franklin.  “This trend is also fueled by the growth in median fund size over the years.  As funds grow larger, they need to write bigger checks to get the same ROI.”

The result is fewer deals, but when deals occur, they’re higher-dollar ones, said Franklin, which is what the data shows as well.  Median fund size in 2020 was $75 million, compared to $20.3 million in 2015, according to the NVCA data.

“The amount of interest from out of town venture and PE investors has only intensified over the years,” said Jason Caplain of Bull City Venture Partners.  “That comes directly off of the amount of capital our area has raised. It also comes from the exits that occurred. In both cases, it is FOMO on the next company here.”

The Triangle, in particular, is attracting interest from investors, though across the state, entrepreneurs raised more than $3.4 billion across 222 deals for 185 unique companies, found the Council for Entrepreneurial Development (CED).  CED data also tracks the five year investment into North Carolina companies, noting about $9.6 billion across 1,025 transactions from 834 companies.

Epic Games brought in multiple billion-dollar fundraising rounds, and AvidXchange brought in more than half a billion in funding across a series of deals.  But other companies are attracting significant capital in North Carolina, as well.

Among those companies: Pendo, which raised its Series E round in October 2019 and is now considered a unicorn, which Franklin said might be looking for an exit soon; Belief Biomed, valued at $682 million based on its last round, JupiterOne ($230M), StrideBio ($182M), Istari Oncology ($173M), Vestaron ($111M), and Second Nature ($100M), according to Franklin.

“Top-tier research universities, a strong talent pipeline, and thriving tech and healthcare ecosystems already embedded in the area play a large role in the formation of technology and life sciences companies in the state,” said Franklin, noting that the role of Research Triangle Park and the universities in the region cannot be overemphasized in their importance in making the Triangle into one of the nation’s leading life science bases.

“Cutting-edge research facilities, a large community of 775 bioscience companies that employ more than 67,000 people, low costs of living and of doing business, a highly trained workforce, and an already bustling startup scene are going to produce lots of great startups, many of which will take advantage of the existing local expertise in technology and healthcare,” said Franklin.

That’s one of the reasons that NCVA selected UNC-Chapel Hill as its partner for VC University, which will run virtually between June 14 and June 16.

“A silver lining from all that we’ve been through is a renewed interest among investors in life sciences, especially when it comes to vaccines, antivirals, and drug delivery systems,” said Franklin.  “The tailwinds for this sector due to the pandemic should last for years, which is good news for the NC startup ecosystem given the types of companies which bloom there.”