The State of Startup Funding in the Region

The focus of several sessions we attended as well as many of the conversations we had at South by Southwest (SXSW) is venture capital.  We have heard over and over here at SXSW the need for strong and diverse capital markets to support an entrepreneurial ecosystem.  This is something we very much understand in Raleigh. 

Many ingredients go into building the right startup community ecosystem. These include great education and research, access to large corporations, seasoned mentor and advisors, and both angel funding and venture capital. “Something the Triangle region has done a good job of is building centralized communities of entrepreneurs, which helps to draw more capital attention than a startup would find working alone,” says Liz Tracy, Director of Community Engagement with HQ Raleigh.

2015 was a banner year for startups in North Carolina.  TheCouncil for Entrepreneurial Development’s (CED) Innovators Report compiles data on startup and scale-up activity happening in North Carolina.  The report noted that in 2015 startups across North Carolina raised over $1.18 billion.  The $1.18 billion raised represents a 122% increase over the previous year.  Since 2013, we have seen a 200% increase in overall funding for the state.

In 2015, 93% of funding was in the technology and life sciences sectors. Both these sectors have, historically, been strengths of Raleigh and the Research Triangle. Funding for technology firms has increased by 97% since 2014, and 463% since 2013. The life science sector has seen a similar increase in funding, up from 213% in 2014 and 160% in 2013.

The funding activity was heavily concentrated in the Research Triangle.  Funding in the Triangle Region for 2015 made up 75% of the $1.2 billion in equity raised in North Carolina overall.

North Carolina is increasingly becoming a destination for investments from around the country.  The Innovators Report notes that in 2015, 72% of the investors were from outside of North Carolina.  The largest number of investors from outside of the state came from California. 

Exit Event reported that the nearly $1.2 billion in funding was 57% higher than the $675.5 million the National Venture Capital Association reported that North Carolina companies raised.  That means that the remaining money was raised via other types of funding like Angel Investors or grants. 

It’s the diversity of funding and funders that indicates a strong ecosystem. 

To learn more about the Innovators Report, check out CED’s website or Exit Event’s great summary article.