The 3 Rivers Venture Fair
kicks off at PNC Park this week, bringing investors together with emerging new companies in the region.
New this year is a comprehensive report of trends and highlights in Pittsburgh during the last five years, 2008-2012.
“Optimizing Opportunities, Investment in Pittsburgh’s technology sector”
is sure to spark the interest of any stakeholder considering an investment in the region, says Rich Lunak, CEO of Innovation Works, the largest seed-stage investor in the region.
The report provides fresh content and insights on investment trends in the region’s growing technology sector. The data is culled from both IW and Venture Source and Ernst & Young compiled and validated the figures. It will become a staple offering at the 3RVF beginning this year.
Among the most noteworthy highlights was the total scale of the regional impact and the value of the exit transactions, says Lunak.
In the last five years, 217 technology companies attracted more than $1.3 billion in investment from venture capital firms, angel investors, strategic investors, accelerators, seed funds and other sources.
At the same time, Pittsburgh saw 28 companies make successful exits for a value of $2 billion, remarkable numbers considering the country was in a recession, he adds.
Many of those exits involved deals estimated at more than $95 million, including the acquisitions of Vocollect ($190), M*Modal ($130) and Carnegie Learning ($97 million).
“It was also nice to see that Pittsburgh bucked the national trend that saw number of total deals and dollars go down,” Lunak adds. “Pittsburgh deals were up significantly.”
“The sheer number of firms making investments was eye opening to me,” adds Lynette Horrell, managing partner, Ernest & Young. “Our firm is focused on trends; looking at this data in a comprehensive manner is very beneficial to us.”
The report also identified several challenges. Indigenous venture capital funding decreased steadily from 2006 to 2011, meaning entrepreneurs have had to work harder to raise capital here, Lunak says.
Several new funds have been launched, the largest being a $40 million fund in 2012, which has helped to reverse this trend.
Lunak and Horrell will introduce the report at the 3 Rivers Venture Capital Fair at 2 p.m. this Thursday, April 11th
Among the other takeaways:
Despite a slowing on a national level of both the number of investment deals and amount of funding, the Pittsburgh region saw a 54% increase in the number of fundraising rounds. The overall amount of funding, however, increased only slightly from 2011.
In 2012, there were 190 deals in the region totaling $329.1 million in funding. In 2011, there were 123 deals totaling $326.9 million in funding.
Software companies, including consumer and enterprise software, received the largest portion of VC funding in the region in 2012, followed by medical devices, energy technology and health care IT.
The diversity of these sectors speaks to the broad base of technical talent in the Pittsburgh region. The breakdown is as follows: enterprise software (24%), consumer software (22%), medical devices (14%), energy (8%), biotech (7%), healthcare IT (7%) and electronics (5%).
Of the funding received by the tech sector during the last five years, three-quarters of the total came from VC firms. The second largest share was provided by angel investors followed by corporate investors and seed funds and accelerators.
Nearly two-thirds of all the funding received consisted of smaller rounds featuring angels or seed funds and accelerators as the lead investor.
Writer: Deb Smit
Source: Rich Lunak, IW; Lynette Horrell, Ernst & Young