Latest news with #VentureMonitor
Technical.ly
21-07-2025
- Business
- Technical.ly
Baltimore startups see funding slow as AI dominates VC interest
Venture capital dropped again in Baltimore last quarter, as investors pulled back amid a broader dip that mirrors national market trends. Companies secured $70.8 million across 15 deals in the Baltimore region in Q2 2025, according to the latest Venture Monitor report, released quarterly by PitchBook and the National Venture Capital Association. That represents a 46% drop compared to the first quarter of the year, which brought in $132 million across 21 deals. Q1 had already marked a slowdown from the last quarter of 2024, when investment jumped to close out the year. The continuous downturn in the Baltimore region isn't surprising to McKeever 'Mac' Conwell, founder of local firm RareBreed Ventures, who said the VC industry is still undergoing a 'reset' after the boom in 2021. 'It's a lot of macro trends that we're seeing in the data, but playing out here locally,' Conwell said. 'Generally speaking, the funding market has been really, really tough the last three years.' UpSurge Baltimore, which also tracks local venture capital activity, reported a different figure for Q2 total investment: $93 million. According to UpSurge data analytics manager Chris Bunner, it's a good reflection of Baltimore's core funding base, which he pegs at $90–$100 million per quarter. In past years, quarterly totals were often inflated by one or two mega deals, he said, so current figures appear lower by comparison. Over the past decade, local VC funding has gone on a volatile ride. Activity ramped up in 2018, with funds deploying capital faster than ever, according to RareBreed's Conwell. After a brief pause at the start of the pandemic, capital flooded in — fueled in part by the crypto boom, he said — which created massive liquidity and drove up startup valuations. Many venture firms were investing their funds in just 1 to 2 years instead of the usual 3 to 5, pushing limited partners to keep up with the faster pace. When public markets dipped in 2021 and 2022, it put a damper on investor enthusiasm, Conwell said. That made their venture allocations look disproportionately large, causing many to pause or reduce their commitments to VC funds. With less capital flowing into firms and many early-stage investments made at inflated valuations, the industry was forced to slow down. 'Everybody's like, 'Oh, we've overspent and spent way too much money, way too fast. Now let's take a step back,'' Conwell said. AI is investor catnip, but the local pipeline remains strong While overall funding remains tight, certain sectors are emerging as clear priorities for investors, shaped in part by shifting federal policy and economic focus under the Trump administration, according to the NVCA Q2 report. 'Companies operating in AI, national security, defense tech, fintech, and crypto — sectors aligned with the administration's priorities — are attracting disproportionately more investor interest, and this trend will likely continue throughout President Donald Trump's term,' the report read. Conwell also noted the heavy investment concentration in AI companies. Even startups that aren't AI native, he said, are often fitting it into their strategies to remain competitive in the funding landscape. This focus is reflected in Baltimore's two biggest deals of the quarter: Pixee, an AI-powered cybersecurity platform, and Impact Analytics, which applies AI to data analytics. Each secured $15 million. It's likely that biotech, one of Baltimore's largest sectors, will see a decrease in funding, per Conwell, since it relies heavily on federal grants cut by the Trump administration. Bunner, of UpSurge, emphasized that deal type and stage also matter when analyzing the state of the local startup ecosystem. He pointed to several recent Series A deals as signs the region still has a strong early-stage base. That's important for long-term growth, he said, because each Series A sets up the possibility for future later series rounds. 'In a smaller market like Baltimore, it's important to ask not just how much is being invested, but where those deals are happening,' Bunner said. 'Are companies getting funded at every stage? That's what shows whether the pipeline is healthy.' Maria Eberhart is a 2025-2026 corps member for Report for America, an initiative of The Groundtruth Project that pairs emerging journalists with local newsrooms. This position is supported in part by the Robert W. Deutsch Foundation and the Abell Foundation. Learn more about supporting our free and independent journalism.
Technical.ly
18-07-2025
- Business
- Technical.ly
VC slowdown continues as Philly startup funding hits a five-year low
Venture capital went down in Philly again last quarter, falling to its lowest levels since 2020. Companies in the Philadelphia region raised $394.4 million across 83 deals in Q2 2025, according to the latest Venture Monitor report, released quarterly by PitchBook and the National Venture Capital Association (NVCA). That's down again from last quarter, when startups in the region raised $750 million across 114 deals. The Q1 results had already disappointed investors who were optimistic heading into 2025. This is the lowest quarter for VC activity since Q1 2020, when the region raised $333 million over 100 deals. These numbers aren't surprising given the economic and policy uncertainty this year, especially in Q2, Dean Miller, president and CEO of the Philadelphia Alliance for Capital and Technologies, told 'Investors are very gun-shy to invest in companies that have any kind of exposure to the risks,' he said. Plus, companies are waiting to see whether they'll be impacted by potential policy changes like tariffs. Usually, Q2 is a 'catch-up quarter' from Q1, according to Howard Lubert, regional president of Keiretsu Forum Mid-Atlantic. The April to June period tends to be stronger because delayed deals at the end of the previous year finally close, making the Q2 2025 numbers seem especially low. This year's deal count shows that new deals aren't making it through due diligence and existing deals are falling through, he said. 'It's a sign that investor hesitancy isn't letting up,' Lubert said. 'Founders are facing a capital environment that remains unforgiving.' How the 'Big Beautiful Bill' shaped the market Policy changes are also influencing the investment climate. The only sectors seeing big gains are those prioritized by the Trump administration, like defensetech and artificial intelligence, according to the report. Even then, most of that money went to a handful of companies, none of them in Philly. 'This all underscores the importance of forward-looking public policy,' said Bobby Franklin, president and CEO at NVCA. 'The recently enacted One Big Beautiful Bill Act delivers significant wins for founders and investors … However, the bill also introduces new complexities.' An expansion on Qualified Small Business Stock (QSBS) rules, a tax benefit for shareholders of qualified small businesses, could lead to more restructured deals aiming to support firms' existing portfolio companies, according to Lubert. But lean companies with short return-on-investment timelines will still take priority, he added. The new legislation also ensures permanent research and development expensing. Companies can deduct the costs of domestic research and development from taxable income in the year those costs are incurred, which will hopefully increase cash flow for companies, Miller said. There are new challenges, too. Changes to university endowment taxes mean the institutions with large endowments will face higher tax rates on their investments. The act also outlines plans to decrease investment in clean energy and transportation innovations. ' The Big Bill offers long-term benefits,' Lubert said. 'But those advantages only matter if strong companies are emerging and exits are possible.' There's still hope for a rebound Despite these low numbers, Philly's challenges are not unique and its diverse economy positions it for recovery, according to Miller. Philadelphia is home to a variety of strong industries, meaning it won't rely on just one sector to recover from these challenges, he said. Plus, Philadelphia is a top ecosystem for early-stage companies, which don't rely on venture capital to grow, and challenging times often lead to more new startups, according to Miller. For later-stage founders, hope is not lost, though. Generally, the region is still raising more than it was ten years ago. The best founders are still working towards raising money and the best companies with the best teams will succeed, he said. For example, Sojo Industries raised $40 million and Fore Biotherapeutics raised $38 million last quarter, both of which were among the region's top 5 deals. 'I'm a big believer in 'raising customers,'' Miller said. 'So focusing on your business, your product, your go-to-market, and most importantly, your attraction of customers, is mission critical in these types of environments.'
Technical.ly
18-07-2025
- Business
- Technical.ly
DC accrues $514.6M of VC in Q2 — a drop from the start of 2025
Venture capital investment in the DC region slowed in the second quarter of the year, and the White House's lack of clarity on regulation and policy could be to blame. Companies nabbed $514.6 million across 64 deals in the DMV, according to the latest Venture Monitor report released quarterly by PitchBook and the National Venture Capital Association. That's a sharp decline from the first quarter of the year, with its reported $1.3 billion across 60 deals — meaning this most recent quarter saw lower deal values. The region isn't alone in venture capitalists writing smaller checks, per the Venture Monitor report. This is part of a broader, 'more cautious investment climate' across the nation, said Tahira Dosani, cofounder and managing partner at ResilienceVC. 'We're no longer in this 'growth at all cost' mentality,' Dosani, who announced a new $56 million fund earlier this year, told 'We're in an era where there's a focus on capital efficiency, on sustainable pathways to profitability and the broader tightening of fewer companies successfully raising rounds because investors are being more selective.' This has been the mindset for the last couple of years, per Dosani. DC has had a handful of blowout quarters, but they're often led by major raises from established companies. Rockville nuclear power company X Energy nabbed about half of the funds at the beginning of the year, as did the e-cigarette giant Juul to close 2024. This is why looking at data quarter-to-quarter can be difficult, explained Les Alexander, a professor at the University of Virginia Darden School of Business. In 2024, companies in the DMV collectively raised $4.3 billion — the highest amount since 2021. 'I often find that in some markets like the DMV, quarter to quarter activity can be impacted by a few larger deals,' Alexander wrote in a statement to 'so you need to be careful to not draw broad conclusions without longer data trends.' Unstable regulations could lead to lower activity ResilienceVC's Dosani noted that uncertainty around policies like tariffs are making investors more cautious. There's generally a tendency toward deregulation under the Trump administration, which can benefit business, but there needs to be clarity, she said. 'Regulatory uncertainty always makes it harder to make decisions,' she said. Because of this precariousness, it's more difficult for investors to vet startups adequately, said Elena Loutskina, a professor at the Darden School of Business. 'The global economic uncertainty, including one about tariffs, hampers VCs' ability to properly evaluate the prospects of given startups,' Loutskina wrote to in an email. 'This makes investments exceptionally risky and unattractive.' Alexander agrees. Inconsistent trade policy is causing investors to be wary, he said. The economic picture also depends on industry, he noted. He's already seen climate technology companies nab less funding because of policy changes. 'On the other hand, defense tech and cybersecurity, which are attractive investment areas for companies and investors in the DMV region, is seeing increased deal activity with the favorable support from policymakers,' he said. What startups — and investors — should know Securing investments will continue to be challenging for startups, especially for those in early stages, Alexander said. But AI companies will likely continue to see funding, he said. Fundraising for the capital to invest is slowing, too, Alexander said. That's because limited partners aren't getting liquidity back from prior funds they've invested in and a lack of exits, ResilienceVC's Dosani explained. Because of all of this, founders need to be capital-efficient, she said. They also need to demonstrate clear traction to investors and show profitability. 'It's not necessarily a bad thing,' Dosani said. 'It just is the reality of this market, and I think what it will translate into is that … the best founders are the ones getting the cap[ital].' This constriction also requires investors to be more supportive of founders outside the money, she said. That means being more hands-on in business strategies, for example. 'Founders have to think about how they tell their story, how they execute and operate their businesses,' Dosani said, 'and I think investors have to do the same.'
Technical.ly
30-04-2025
- Business
- Technical.ly
Baltimore hits $90.9M in VC activity to start 2025
The Baltimore region began this year with a slow trickle of venture capital activity, in stark contrast to its spike at the end of last year. This year's first quarter saw $90.9 million invested across 19 deals throughout the Baltimore metropolitan statistical area, according to PitchBook and the National Venture Capital Association's latest quarterly Venture Monitor report. That's about 50% lower than the last quarter, which saw $179.2 million across 15 deals — meaning check sizes are typically lower across more deals. HarborLink, a late-stage telecommunications infrastructure company, nabbed approximately half of the total money in the region this quarter. These statistics are not surprising to Jeff Cherry, the founder of the Baltimore-based accelerator Conscious Venture Lab. In addition to leading the program's parent organization, the Novella Center for Entrepreneurship, Cherry also serves as the CEO and managing general partner of the early-stage investment firm Conscious Venture Partners, which has funded several alums of the accelerator. There's too much money 'on the sidelines,' he explained — in other words, there is wealth to be invested in companies, but limited partners aren't writing many checks to put money in funds. Investing in venture capital is risky, Cherry acknowledged. Liquidity has been lacking over the last decade, with few exits or IPOs. But more deals need to get done, and those funds should also be from the Baltimore region. 'There's not enough money, local money, coming into venture as there should be,' Cherry told 'in order to continue to catalyze the great things that are happening here.' He's about to start raising money for Conscious Venture Partners' third fund, and is bracing for difficulty. 'We know it's going to be a challenge,' Cherry said. 'It's going to be an uphill battle.' Baltimore's VC flow was also slow at the beginning of 2024. In that year's first quarter, the region's companies accrued $89.8 million across 20 deals — nearly identical figures to Q1 2025. 2023 and 2022 started with $78.3 million and $77.7 million, respectively. This isn't unique to Baltimore, though: Cherry noted that deal flow is down in other parts of the Mid-Atlantic. Philadelphia saw a dip in activity, and DC's numbers were lower this quarter compared to the end of last year. Contrarily, Pittsburgh saw historical numbers, though 90% of the total funds went to two companies. AI strength amid anti-DEI attacks David Asbery, founder of the direct-to-consumer platform independent musician platform Pedestal, has been going after capital for about two years. This year, he received $25,000 from Maryland's venture arm TEDCO. TEDCO initially rejected his funding appeal, but encouraged him to do a program through the organization to polish his pitch. He got to pitch for 10 minutes and got 10 minutes of feedback as well as connections to investors. 'Anytime I get rejected, and there's some type of, 'Hey, we didn't pick you for this, but click here and do this,'' Asbery told 'I always click here and do whatever they say … because I look at it as following the stream.' Now he's in talks with additional venture capitalists in Baltimore, but he's found that investors want to participate with fellow funders in a $1 million round — not necessarily write the checks for hundreds of thousands that he's seeking out. The process of finding additional investors is also time-consuming. Asbery is not looking for a round of that caliber at the moment, but found these investor conversations helpful for making the connections he can leverage when he reaches that point. That said, he's seen a stark difference in raising money for Pedestal versus Rush Roto, the AI photo editing platform developer he cofounded. 'Depending on the industry that your startup belongs to, that also is a big determining factor in the type of funding and attention you're going to get,' Asbery said. Rush Roto has collected $500,000, including some funds from an initiative for Black founders backed by Amazon Web Services. He predicts that accelerators and programs for underrepresented founders will continue to dwindle under the Trump administration due to attacks on diversity, equity and inclusion programming. He speculated these attacks may explain why venture capital funding dropped this quarter. 'Now we're in a new environment where it's frowned upon,' he said. Founders: It's time to be capital efficient Cherry from Conscious Venture Partners believes it'll continue being difficult for startups to raise. He encourages founders to focus on profitability and becoming capital efficient. Those that follow this will grow slowly, but it'll work out in the long run, he said. Pedestal's founder Asbery is following that rule: He still has money in the bank from the TEDCO investment. Given the economic turmoil, startups will likely have to raise at lower valuations because of risk in the market, Cherry said. Tariffs will also negatively affect founders — some startups relying on products from abroad may fail, he said. Despite these difficulties, Cherry wants venture capitalists to write checks. Investors need to double down on investing in innovation and early-stage businesses, because that's where the returns exist. This quarter marks a downturn for Baltimore, but compared to when Cherry moved to the region in 2013, the ecosystem has grown exponentially. 'I think that we are getting much better as an ecosystem of being connected, but we're still not perfect,' Cherry said, adding: 'I still think that there's work to do in terms of turning this collection of assets we have into a stronger ecosystem. It is light years ahead of where it was.'
Technical.ly
25-04-2025
- Business
- Technical.ly
DC kicks off 2025 with $1.3B in VC investment, but early-stage startups struggle to raise
The DMV started the year out with a venture capital bang despite federal policy and funding chaos at the White House. Companies accrued $1.3 billion in venture capital funding across 59 deals, according to the latest Venture Monitor report released quarterly by PitchBook and the National Venture Capital Association. That's down from the previous quarter, which saw $2.5 billion in funding across 60 deals. The Q1 2025 investment total is higher than a year ago — Q1 2024 saw $797 million raised — but it happened across 30% more deals, meaning this time last year there were more deals of a lesser dollar value. The biggest raise in the region this quarter was by Rockville nuclear power company X Energy, at $682 million. About $500 million of X Energy's raise was originally reported last quarter, per Pitchbook senior PR specialist Amy Warmenhoven, but after additional funds came in, the close date was moved to Q1 2025. The Q1 flurry of activity is a good sign to Casey Williams, partner at the fintech-focused venture firm Fenway Summer in DC. 'It means that VCs are doubling down on companies in their existing portfolio,' Williams told 'or are excited to write bigger checks.' There was a lot of optimism going into 2025 in part due to the Trump administration's deregulatory aspirations and ties to venture capital, she said. But that was before anyone knew there would be so much volatility initiated at the federal level. 'The only thing that we can say with certainty is that the future is very uncertain, especially when you talk about DC,' Williams told 'and the way that policy and politics is going to continue to impact the venture ecosystem.' Matt Gittleman, investment director for JHH VC, said 30% of his investments were in companies based between DC and Charlottesville in the last two years. While he agrees the high Q1 total is a positive sign, he's seeing investors move to a 'wait and see' mindset. He believes dual-use technology will continue to see investment, but it depends on the government agency associated with the innovation. More defense companies with offices elsewhere establish a presence in the DMV to finesse more deals, he predicts. 'They're all going to have to come and spend time here in this market to be successful in the long run,' Gittleman told DC is in line with trends nationally, both Gittleman and Williams observed. AI has been a focal point of investment, per Williams, and that will only continue to grow. Investments in AI were 71% of the capital flow in the first quarter, per the Venture Monitor report, including OpenAI's $40 billion round. Williams also acknowledged that it's a tough time to raise for startups. 'It's going to continue to be a difficult journey for founders trying to fundraise,' Williams explained, 'but I do think that there is still capital out there for the best companies that are building in the spaces with the most opportunity.' Early-stage startups are struggling to raise in DC Eri O'Diah, the founder of the legal technology startup SIID Technologies, has met with more than 100 investors since October 2023 without a deal in sight. She's stuck, she explained — her customer base is public defenders, and with federal funding freezes and cuts, it's difficult to do business in the public sector. Without that, she can't prove enough revenue traction to appease investors. Because of the lack of business, she can't hire a team, which she's also been asked about by investors. She's working on pivoting her business to be in the private legal justice space and healthcare industry, O'Diah said, to establish more certainty. 'I feel like the traditional venture model is incredibly flawed, which clearly is why we see there's an explicit bias when it comes to their decision making, right?' O'Diah told 'Gender diversity alone is lacking.' Women only made up 9% of recipients of venture funds with deal amounts of just 2.5% compared to their male counterparts in 2024. O'Diah, a Black woman, has also seen the standards for men raising venture capital be different. 'If you look at the trend for traditional investors, they typically don't invest in folks like me,' she said. Relationships are a key indicator of success Cofounder Dumi Mabhena of the podcast technology startup Shanda noted the murkiness in what investors want. He's met with a few investors through his Georgetown MBA network where he graduated from in 2024, but has decided to go the angel investing route. He's seen people with no product raise money, and he's in the early stage of revenue with a developed product struggling to get funds. 'It's been a bit dumbfounding,' Mabhena said. He credits the struggle to a lack of a network. Mabhena immigrated to the US from Zimbabwe three years ago, and doesn't have the same people he can turn to for investment or advice compared to someone who's been in the region for more than a decade, he explained. 'If you're an immigrant, off the bat you have a limited exposure to networks and building relationships over time,' he said. But building these networks is a key part of securing investments, JHH VC's Gittleman noted, and he expects it to remain important for the foreseeable future. 'That relationship that you develop and those milestones that you set … in stone,' Gittleman said. 'There's no change in that.'
