Julianne Brands - Jan 2017
The beginning of a new year often marks an important time for reflection, resolutions, and, if you’re in our industry, speculating about startup and venture financing trends.
Much has been written about this topic in recent weeks, but what does the outlook show for venture financings in Oregon?
According to Pitchbook and the National Venture Capital Association’s Venture Monitor report, the venture capital industry overall has invested fewer dollars ($69.1B) in fewer deals (8,136) in 2016 as compared to 2015 ($79.3B and 10,468, respectively).
Oregon seems to buck this trend.
2016 data suggests that overall venture investment (venture-backed deals >1M) has increased from 2015 to 2016, both in terms of total dollars invested and total companies funded.
Based on our analysis of Pitchbook data, the size and number of deals <$1M dollars have fluctuated: explosive growth (up 10x) since 2007, followed by a slight decline in the number of deals completed over the last 3 years. This phenomenon is in line with the industry overall, which shows smaller deals declining overall, according to the Venture Monitor report.
Deals <$1M are notoriously hard to track as they often involve a mix of friends and family, angel investors, and micro-VC funds. Thankfully, the Canopy Pacific NW Capital Scan does a fantastic job of surveying these deals in Oregon. Their data suggests that the number of angel and seed investors in Oregon has been growing steadily, which bodes well for a healthy early stage investment ecosystem in Oregon over time
If we dig deeper into the Oregon data, Seed and Series A deals >$1M have seen a healthy increase from 2015 to 2016. While Series B deals have been tightening over the last three years, 2016 saw the most completed Series B deals since 2011. The sample size on these numbers are low (eg. 7 completed Series B deals in 2016) but are nonetheless increasing.
Since 2013, the percentage of deals funded by in-state VCs has started to increase. Over the last 10 years, more investment is coming from in-state investors, particularly in the early stage financing rounds. However, companies are still looking to outside investors with more capital to fund later stage, growth rounds.
While our ecosystem is still small compared to larger markets like Seattle and San Francisco, its growing! If we look at metro regions with startup hubs (we’ll use SEA/TAC, Denver, SLC/Provo, and Bay Area as comparison), the Portland metro regions is growing faster than these comparable cities, if we at aggregate data over the last 10 years. From 2015 to 2016, our annual growth rate in financings was 14%, compared to other cities, which experienced a decline from 2015 to 2016.