RALEIGH – A new report on investor activity in the Southeast identified a 30% increase in venture capital firm creation in the region within the last three years, with the total number of firms in the 10-state region now at 280.

The Triangle is home to 27 firms tracked in the third annual Southeast Capital Landscape Report, which was jointly issued by Embarc Collective and Build In SE.

The report attributes the region’s increasing access to capital to a number of factors, including the migration of technology firms and technology talent to the region, as remote work opportunities are changing how firms and individuals are thinking about the intersection of work and living.  Venture firms are also shifting in response, the report concluded, noting that Founders Fund, Harlem Capital, and General Catalyst all opened Southeast offices in the past year.

The report also noted the increasing density of startups, both early-stage and growth-stage, in industry verticals, and the authors highlighted North Carolina’s life science industry, which they noted attracted more than $3 billion in investment and created or announced 3,000 new jobs in the state in 2021.

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“In recent years, the Southeast has experienced an influx of individual tech talent moving in from larger markets like San Francisco,” said Allie Felix, VP of Platform at Embarc Collective, and one of the authors of the report, in an interview with WRAL TechWire.  “Each transplant brings their unique experience and network that will make a long-term impact on our communities, through joining local startups or providing their own investment capital.”

Felix noted that during the prior 18 months, dollars allocated to startups based in the Southeast grew.  Part of that, said Felix, was due to the normalizing of virtual meetings between investors and startup CEOs, and part of it came from an influx of new or relocated firms and new funds raised locally capturing local deal flow.

Still, the Southeast historically attracts less investment capital than other regions in the United States, even as venture capital investment is setting new record highs in the state, region, and nationally.

But that may be changing, said Felix.  “The Southeast has early indicators of a flywheel effect taking place, where early stage startups are growing into growth stage companies that eventually produce an exit, and in turn, reinvest large amounts of capital, resources and talent back into our ecosystems.”

“Seeing this startup lifecycle play out validates to national investors that high growth startups can successfully start in scale in these markets,” said Felix.

How early-stage investing changed, in the Triangle, after the onset of the COVID-19 pandemic