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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.'
Technical.ly
21-04-2025
- Business
- Technical.ly
Pittsburgh's AI strength sends Q1 venture capital soaring
Pittsburgh started 2025 with more venture capital raised than any first quarter in a decade. Companies in Pittsburgh raised a combined $689 million across just 12 deals during the first three months of the year, according to the latest Venture Monitor report from PitchBook and the National Venture Capital Association. The jumpstart more than doubles the region's Q1 2024 numbers of $267.1 million raised. Fewer, larger deals with later-stage startups is a trend that has continued to define Pittsburgh's fundraising landscape since last year. The two biggest deals, later-stage raises from Agility Robotics and Abridge, raked in 90% of the total funds during the quarter. This trend is not unique to the region, though. The US market's more risk-averse VCs seek investments they know they'll get their money back on, according to Anirudh Kapuria, principal investor at local firm BlueTreeVC. 'The current geo-political landscape, volatility in markets, fear of the effects of global tariffs and concerns of market liquidity have led to investors being more hesitant to deploy capital,' Kapuria told 'Instead, funds are skewing towards having fewer but more established companies in their portfolios.' Since 2014, the average deal count in the Pittsburgh region has been 23 per quarter, but with just 12 deals in Q1, it was the lowest deal count of any quarter in over a decade. However, the capital investment for Q1 exceeded the total capital raised in the region all last year, which was about $637 million across 70 deals, according to PitchBook. 'Early-stage startups should be concerned, but things may not be as horrible as they seem,' Kapuria said. Funding for those companies is still available but increasingly concentrated in AI and deep tech, meaning startups in other sectors may need to adjust expectations and explore bootstrapping or alternative funding sources. Founders should also be cautious to make bets on just this Q1 data, according to Ven Raju, president and CEO of startup accelerator Innovation Works and managing director of early-stage venture capital fund Riverfront Ventures. 'While we saw a record-breaking investment of $689 million, it was dominated by two disproportionately large raises from companies in sectors with significant tailwinds, robotics and artificial intelligence,' Raju said. 'This quarter's distribution may simply reflect these outsized raises rather than indicate a definitive shift away from early-stage funding.' Early-stage companies can switch up tactics to compete for VC Pittsburgh touts itself as the robotics capital of the world and there's no question that robotics and AI remain a magnet for venture capital in the region. Agility Robotics, maker of the humanoid robot Digit, raised $400 million in later-stage venture capital in March, raising the company's valuation to $1.7 billion. The AI note-taking startup Abridge raised $250 million in Series D funding in February, raising its valuation to $2.75 billion. Other local startups in the space gained investment attention. Reporting in January claimed the Japanese investment company SoftBank was negotiating a $500 million investment in Pittsburgh robotics company Skild AI. That figure did not appear in the PitchBook report as there has been no formal filing. These major fundraising rounds for AI-centric companies have a 'ripple effect' in the investor mindset, said Kapuria, and influence venture capital allocation towards associated industries and sectors. 'Investors are chasing AI deals, so if a startup has an AI angle, highlighting it can be a tactical advantage,' Kapuria said. 'Of course, care should be taken that this is not AI for the sake of AI, but actually a value-add to the solution and business of the startup.' Of the few other top deals in Q1, tech and AI-powered robotics companies were the majority of the list: Sportstech company Diamond Kinetics raised $18.6 million AI-powered robotics company Thoro raised $6.1 million Cyber insurance marketplace FifthWall Solutions raised $6 million AI-guided vehicle startup Atlas Robotics raised $2.8 million Robotics company Hummingbird Systems raised $2.6 million Semiconductor manufacturer NovoLINC raised $2 million Entrepreneurial networking company 1486 Labs raised $1 million Only three of the top deals in the region, secured by Hummingbird, NovoLINC and 1486 Labs, were early-stage funding. It's key that local startups show 'early traction and capital efficiency' if they hope to secure funding, according to Charles Mansfield, a startup ecosystem builder at InnovatePGH who's written about local VC and works extensively with early-stage startup founders. 'A pull-back on federal funding and private market uncertainty means that a lot of the usual funding stack is frozen for founders right now,' Mansfield said. 'Finding warm introductions to investors before you need to raise is the way to do it. All that being said, build like no one is going to save you.' Just like Pittsburgh, the rest of the country feels the pinch Pittsburgh isn't alone in AI companies leading venture capital investment. It's happening across the country, according to Kyle Stanford, director of US Venture Research at PitchBook. ' The US market has become very bifurcated between a handful of companies able to raise an endless amount of money,' Stanford said, 'and the rest of the market that continues to struggle through a capital shortage.' Of the total deal value in the US, 71% went to AI investment, according to Stanford. Excluding OpenAI's $40 billion round in March, AI still captured 48.5% of the total invested during the quarter. However, the return on these investments remains to be seen. Outside of a few transactions, including 12 completed public listings and a couple high-profile acquisitions, the liquidity market remained subdued, Stanford said. 'Lack of distributions continues to pressure the fundraising market,' he said. 'Just $10 billion in new commitments were closed in Q1, setting the year on pace for the lowest fundraising environment since 2016.' An expected rebound of the VC market no longer seems likely, according to Nizar Tarhuni, executive vice president of Research & Market Intelligence at PitchBook, because new tariffs and policy shifts are having a real impact. 'These impacts amplify economic uncertainty,' Tarhuni said, 'and could further disrupt the private markets by complicating investment decisions, supply chains, exit windows and portfolio strategies.'
Technical.ly
18-04-2025
- Business
- Technical.ly
VCs are losing optimism for Philly startups as investment dollars dip
Despite optimism heading into 2025, macroeconomic conditions caused a decline in venture capital activity in the Philly region. Companies in the Philly region raised $635.4 million across 82 deals in Q1 2025, according to the latest Venture Monitor report, released quarterly by PitchBook and the National Venture Capital Association. Last quarter, the region raised more than $1 billion through 121 deals. Current figures are also lower than Q1 2024, which saw $741 million raised over 123 deals, at the time showing improvement in the region's deal activity. This decline isn't surprising, local investors told Despite hope at the end of last year that the market would show strength in 2025, macroeconomic uncertainty from constant changes at the federal level means that investors are showing more caution, resulting in fewer deals and fewer dollars invested. 'The drop … is not just seasonal fluctuation — it's a market signal,' Howard Lubert, regional president of Keiretsu Forum Mid-Atlantic, said. 'It's paralysis. And that paralysis is driven by policy uncertainty, tariff confusion and the prolonged drought in fund distributions, which are throttling [limited partner] confidence.' The market shows a slowdown in exits compared to last year, which saw an increase in exit activity in Philadelphia. A 'highly volatile' market means the environment right now isn't good for exits, Dean Miller, president and CEO of the Philadelphia Alliance for Capital and Technologies, told Deals like mergers and acquisitions are difficult because the valuation of companies is fluctuating. All together, these trends are dampening the momentum that startups were feeling last year. At the end of 2024, there was a lot of optimism and a general belief that the incoming Trump administration would be more friendly to business, according to Miller. But federal funding cuts to healthcare and education are expected to cause a big impact, especially in Philadelphia, which is known for its ' eds and meds.' 'That day-to-day mayhem creates instability, which at the public market level is really challenging and difficult,' Miller said. 'That also spreads to the private market level as well.' Nationally, deal value is up this quarter, but 10 deals — none Philly-based — valued at over $500 million made up about 60% of all activity in the United States, according to the report. 'Despite a few significant transactions fostering a narrative of market resurgence, VC remains challenging for investors, companies and limited partners,' the report read. Startups need to prove revenue to land funds in 2025 Philadelphia's VC activity aligns with national trends that show that investors are adverse to risk. VCs are only investing in companies that will result in revenue, which could discourage the next generation of regional founders, according to Lubert. '2025 is about surgical precision,' Lubert said. 'The days of funding hype are over — it's time for disciplined capital, tough questions and clear outcomes.' Most deals are going to serial entrepreneurs and founders who've already had success, Lubert said. Investors want companies that have traction and real customers. They're only interested in deals that are efficient on capital, have a clear exit timeline and will not need additional funding rounds. Firms like Keiretsu are also preparing for these new conditions by reframing the way they consider investments, Lubert said. 'Bringing in experienced operators, locking in milestone-driven returns, and structuring deals for distributions, not just equity appreciation,' he said. 'That's where the next wins are going to come from.' Conservative decisions and unique products will prevail Despite investors tightening their belts, startups that have unique products and strong teams will always be able to find funding, Miller said. Companies can prepare themselves for continued change by staying informed about what's happening at the federal level and being conservative with their plans and money, he said. Philadelphia also still sees companies in a range of sectors that are getting funding, Sean Dowling, a partner at Osage Venture Partners, said. The top deals of the quarter were in healthcare, financial services and information technology. 'We are encouraged by the diversity of investments that are happening across the region,' Dowling said. 'Reflecting the broad range of startups that are founded in and remain committed to building in Philadelphia.' Sarah Huffman is a 2022-2024 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Lenfest Institute for Journalism.
Technical.ly
17-03-2025
- Business
- Technical.ly
Does the Spark Therapeutics writedown undermine Philly's biotech swagger? Startups have bigger things to worry about, they say
A shining star of Philadelphia's life sciences ecosystem recently faced a setback, putting a dent in the region's reputation for success in the sector. Cell and gene therapy standout Spark Therapeutics is being restructured following the end of its trial for a hemophilia A gene therapy treatment, and parent company Roche is classifying the former startup as a financial loss, according to the Philadelphia Inquirer. Spark says it's still working on a new gene product for the disease and stakeholders say this downturn doesn't discredit its years of impact. The situation is, however, calling attention to how life sciences startups face challenges like federal funding cuts and product development costs — though industry leaders still say they're optimistic about staying afloat by tapping into the talent and resources that exist here. One restructuring setback won't worsen investment opportunities for other life science ventures, according to Dean Miller, president of the Philadelphia Alliance for Capital and Technologies. 'You're not going to dissuade investors because a pharmaceutical company deprioritized an acquisition,' Miller said. 'That happens all the time.' Philadelphia is consistently a top region for venture capital and life sciences. The Philadelphia Metropolitan Statistical Area is a top-five venture capital market in the US, with life sciences as one of its major sectors, according to PitchBook's quarterly Venture Monitor report. Despite the high ranking, access to capital remains one of Philly's top challenges, especially locally, per Rebecca Grant, senior director of life sciences and innovation for the city's Department of Commerce. Recent challenges like Spark's signal that the industry needs to work toward making gene therapy manufacturing more cost effective, which would get more therapies to market and help attract investment, Grant told But it's also an example of how a company can pivot to stay afloat and continue working. 'They really created a lot of recognition for gene therapy and innovation,' Grant said. 'Now more people understand what gene therapy means and how it can literally cure disease.' Spark Therapeutics did not immediately respond to request for comment. Spark signaled strength in Philly life sciences — what does it mean now? Spark Therapeutics is one of Philly's go-to examples of success, and it helped build up the ecosystem in Philadelphia, Miller said. While restructuring could lead to staff cuts or shrinking offices, following layoffs at the company last summer, this is likely a short-term pain point, he said. After developing the first FDA-approved gene therapy, Luxturna, the Penn spinout broke into the mainstream. When pharma giant Roche acquired Spark in 2019, it was the largest VC-backed exit in Philadelphia at $4.8 billion, bringing more attention to Philly's life sciences ecosystem. '[It's] never easy when your trailblazer starts to disappear a little further.' Dean Miller, president of the Philadelphia Alliance for Capital and TechnologieS Since then, the company welcomed a new CEO and announced plans for its 500,000 square foot Gene Therapy Innovation Center in University City, which is expected to be completed next year. The company previously said the site would house over 500 jobs. 'Gene therapy is not a huge sector, and Spark was a trailblazer,' Miller said. '[It's] never easy when your trailblazer starts to disappear a little further.' Still, stories like Spark's are something that the ecosystem has seen before. Big successes come and go, but the momentum remains, he said, pointing to the example of Centocor, a biotech company founded in Philadelphia in 1979. Centocor's work was groundbreaking at the time, developing large molecule therapies and treatments for rheumatoid arthritis, Crohn's disease and other medical conditions, Miller said. Johnson and Johnson acquired Centocor in 1999 for $4.9 billion. At the time of acquisition, Centocor maintained its brand identity, but eventually completely integrated into Johnson and Johnson. However, the people who worked at Centocor are still around in the Philly life sciences ecosystem and helping new biotech startups get off the ground, Miller said. 'Twenty years from now, I think we'll be saying the same thing about Spark and its impact,' Miller said. 'Not just what it did in developing a new line and approach to gene therapy, but how its people went on to found other companies, to fund other companies.' Fed funding blocks, fleeing investors are the bigger rift Current economic uncertainty and funding changes at the federal level do signal a bit more concern around Spark's turmoil, Miller said. The Trump Administration recently proposed huge cuts to funding for the National Institutes of Health, already seeing grants for vaccine-hesitancy research being rescinded. Philadelphia received $5.9 billion from the NIH between 2019 and 2023, according to the Commerce Department's 2024 Life Sciences Impact Report. Without NIH funding, the United States will fall behind in terms of medical research, Grant said. While stakeholders hold out hope that the administration will change course, the ecosystem needs to start thinking about alternative funding opportunities, like philanthropic foundations and a local pilot program that Grant said the city is working on to target early-stage life sciences companies through the city's small business catalyst fund. 'It takes millions and millions of pre-revenue dollars to bring a drug to market,' Grant said. 'So I'm developing and thinking out a program that I hope to release soon that can help small companies around the city that are moving towards commercialization.' However, this uncertainty could offer a benefit for Philly, she said. If there are fewer funding opportunities and companies have to be more careful with money, Philadelphia's affordability could attract more companies. This could also be an opportunity to increase collaboration across the ecosystem and make capital stretch farther, she said. Researchers doing similar work at different institutions may choose to team up and have a better shot at funding while they wait for more VCs to come through with cash. 'We would always love to see some bigger, deeper-pocketed investors,' said Kathie Jordan, managing director of the healthcare investment group at Ben Franklin Technology Partners of Southeastern Pennsylvania, 'and we continue to work on building out those relationships with investors who really can lead those rounds in the tens of millions.' Philly leans on new labs, strong workforce to push ahead Despite setbacks, Philadelphia continues to lean into its strengths and work toward growing the life sciences ecosystem. Lab and office space is a huge opportunity in the region right now, Grant from the Commerce Department said. Developers are continuing to build more workspace and companies are showing interest in these spaces even before they're finished. 'I don't think people would be continuing to invest if they felt like this ecosystem was going to fail,' she said. 'I don't think people would be continuing to invest if they felt like this ecosystem was going to fail.' Rebecca Grant, senior director of life sciences and innovation for Philly's Department of Commerce The city also has a strong talent pool and workforce, she said. The region ranked No. 8 for life sciences talent on CBRE's 2024 US Life Sciences Talent Trends report, slipping down two spots, but remaining in the top 10 for the third year in a row. The lower cost of living and proximity of major research institutions are also benefits. New success stories are also coming up. For example, Mineralys Therapeutics stock price surged after announcing positive clinical trial results for its hypertension drug candidate lorundrostat. The company raised $192 million after going public last year. As companies like Mineralys continue to grow, they will also hire the talent that exists here in the market, Miller said. But Philly needs to learn how to market itself better and get comfortable touting its accomplishments, Grant said. The key is to 'evangelize' everything the ecosystem has to offer. 'We've always maintained our head above water,' Grant said. 'The innovation we're creating here is just so important to the greater good globally. We'll continue to innovate.' Sarah Huffman is a 2022-2024 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Lenfest Institute for Journalism.
