Report: Triangle ranks among top metros for best VC returns

As more Triangle startups such as Ansible are sold to big companies (Red Hat) for big dollars ($100 million-plus), investors are taking notice.

Especially venture capitalists.

VC investors are becoming increasingly attracted to Research Triangle area startups as various reports have cited over the past couple of years. Why?

Those big exits.

New data shows that Triangle startups are delivering big returns for investors. In fact, RTP is one of the nation’s hottest markets.

Mikey Tom, writing at the VC investment site PitchBook, says Raleigh-Durham ranks second in deals that return between 3X-10X, or three times to time times, on dollars invested.

And in overall exit value per deal, the Triangle ranks fifth.

Using data compiled from its PitchBook Plaform calculations based on VC data acquired over the past 10 years, PitchBook compiled its report based on a formula it calls MOIC.

It means:

Multiple on Invested Capital = exit value/total VC raised

Before jumping into the actual numbers, a bit more background is required to spell out what MOIC means.

PitchBook criteria:

Full exit (acquisition or IPO) in last 10 years
Companies must have raised at least $500,000 in VC funding before exiting
We have a confirmed record of and amounts for all funding rounds to ensure accurate total invested capital
We have a confirmed amount for the exit (IPO value is equal to market cap at IPO)
Included cities must have at least 30 companies that meet all of the above criteria

PitchBook data includes information on 31 Triangle-area exits.

Raleigh-Durham actually leads the nation in exits that deliver 3-5X returns at 39 percent.

The area stands second in a 3-10x range at 77 percent, sharing the runner-up spot with New York City. Chicago led the 3-10x value market at 81 percent.

In average MOIC, the Triangle dips a bit to a fifth-place ranking at 8.13. Washington, D.C. is tops at 11.04.

By the way, Raleigh and Durham economic developers as well as startups can tout the Triangle did better in each of the three MOIC charts than Austin.