RESEARCH TRIANGLE PARK — National deal flow last quarter was close to the lowest in six years, according to the PitchBook-NVCA Venture Monitor report for Q3 2023 report released Thursday.
But three Triangle investors— Scot Wingo of Tweener Fund, Jan Davis of RTP Angel Fund, and David Gardner of Cofounders Capital—told WRAL TechWire they saw strong deal flow last quarter.
“This has been an amazing quarter for us,” said Gardner. “Deal flow is as high as we have ever seen it and we have already done seven investments this year.”
Gardner added that some of the deals were smaller “follow-on rounds,” but shared that he’s seeing deal flow nonetheless.
“Our companies have been able to find funding, although attractive exits have been harder to find than normal,” said Gardner.
Davis said that, while she agrees with PitchBook’s impression of the overall market, deal flow in the Triangle is moving.
“Pre-seed and seed stage in the Triangle is clearly bucking the trend with the activity levels at Tweener, Primordial, and our new RTP Angel Fund,” Daivs told TechWive via email. “On the other hand, raising seed and Series A appears to be much more challenging!”
‘Scrappier’ Triangle stays stable
Wingo, who reported a “strong” Q3 for Tweener Fund, said that part of the strength of the Triangle is the “scrappiness” for finding deals or making smaller deals work.
“The strength of Triangle startups is we’re scrappier than other regions,” said Wingo. “That’s due to relatively sparse funding in the region, but the silver lining is our companies aren’t living on hundreds of millions of venture capital without signs of getting to cash flow positive. When headwinds form from externalities, our companies hunker down, grow revenues while managing expenses, and make the previous rounds last longer.”
Gardner also commented on how the type of deal flow we see in the Triangle helps to keep this region stable.
“Startups here tend to raise less money, grow more conservatively and focus more on B2B solution selling rather than big B2C paradigm shifts,” said Gardner. “They tend to keep their footprint conservative and are better able to adapt to changing conditions.”
Comparing the Triangle to other regions
Check out these graphs that show how trends in the Raleigh-Cary-Durham MSAs compare to top deal MSAs like Silicon Valley, Austin, and Boston.
While the Raleigh-Cary-Durham MSAs see spikes during busy quarters, overall, the trend shows a steady climb.
In Austin, big leaps starting in 2017 took a harder fall in 2020 and at the beginning of 2022, with notable drops this past quarter.
Silicon Valley's trend shows a steeper incline until 2022, with sharper drops and an overall decline in deal flow since early 2022.
PitchBook-NVCA reports are based on data collected through quarterly surveys; transactions are considered deals if they are "equity investments into startup companies from an outside source."
For more, visit pitchbook.com.