No organization tracks the entire spectrum of capital generation for emerging and startup North Carolina companies than the Council for Entrepreneurial Development. The largest such state organization in the country publishes an annual “Innovators” report tracking much more than venture capital. The preliminary data already looks strong, as does what the latest venture capital report from PricewaterhouseCooper shows. Says the CED’s Dhruv Patel: “2015 was a great fundraising year.”
This Q&A is one in a series WRAL TechWire to amplify upon the data in the 2015 Moneytree venture capital report from PricewaterhouseCoopers in partnership with the National Venture Capital Association and Thomse Reuters.
- Looks like 2015 was strong year for NC with 63 deals, $675 million – What’s your assessment of what the year demonstrated?
2015 was a great fundraising year for North Carolina entrepreneurial companies.
Venture data is incredibly important but it is a single element of the overall funding picture. PwC and NVCA generously partner with CED and share their venture funding data with us.
We will take their 2015 data and add funding numbers drawn from angels and unaffiliated investors, strategics, growth equity, and grants and awards. This total will be released in the first quarter of 2016 in the form of CED’s Innovators
A preliminary review of our data suggests 2015 was a terrific year for fundraising in North Carolina.
- WTW has learned that one $150 million [Humacyte in RTP] deal was not included in PwC totals. This and other “unique instruments” are not included in VC data. Does CED?
Yes, the Humacyte deal will be included in our data set as will other deals done with unaffiliated angels, strategics, growth equity firms, and others.
- If so, could CED’s total for investments could be considerably higher?
The Innovators Report total for 2015 will be considerably higher because it will include larger deals that were not funded through venture firms and it will include grants and awards, which can be a significant driver of funding activity for a state home to many life science entrepreneurial companies.
- Fourth quarter fell off, however. What factors you think drove down deals?
We typically don’t compare quarter to quarter because of all the factors that determine how a deal comes together and when. Most deals begin taking shape much earlier in the year or even before that, so the total funding in a quarter doesn’t necessarily signal the strength or weakness of deal activity in those three months.
When looking at the complete funding picture we don’t see a dip in Q4.
There were a number of bigger deals that are not accounted for in the NVCA data because they are not venture capital deals.
- It appears more money is coming to NC from outside the area. Would you concur? What is driving outside interest?
We are seeing incredible interest in North Carolina companies from out of market investors. We see a particularly strong trend with investors in California and the Northeast doing more and more deals here.
- Several nice exits, such as Ansible to Red Hat for $100 million just two years after launch – are these exits helping draw more interest here?
Absolutely. If investors see success in the region they are going to put more money to work here. These exits raise the profile of the region, attracting new investors and causing existing investors to become more engaged.