Second-quarter reports on venture capital show this mother’s milk of new companies is still going strong, at least in tech hubs that include Seattle. Still, the results are uneven.
The MoneyTree report from PwC and CBInsights showed that Seattle-Tacoma ranked fifth nationally in deal activity, at 45 in the quarter. It was sixth in investment totals, at more than $669 million.
That compares with 61 deals that raised more than $811 million in an especially strong second quarter of 2018. But activity picked up from a slowdown at the end of last year and more money was raised in the second quarter than the first.
The hot ticket for the quarter in venture capitalists cashing out was the June IPO of Seattle’s Adaptive Technologies, which focuses on genetically targeted medicine. At a valuation of $2.4 billion, it was the fifth-largest IPO nationally.
Software and services companies Outreach of Seattle and Auth0 of Bellevue each raised more than $100 million in the second quarter. (Shortly after the quarter ended, Seattle’s Remitly said it raised $135 milllion in new equity investment.)
For all of Washington, $1.2 billion has been raised so far this year in 99 deals. That comes off a strong 2018, which saw $2.1 billion bet on 186 deals. The record came at the end of the dot-com era, when 2000 saw a record $3.4 billion in 279 deals here.
Despite all that, Seattle and Washington face serious competition for all stages of venture funding.
In the second quarter, the leaders in deal activity were the Bay Area, New York City-Newark, Boston and Los Angeles. Those four, along with San Diego, also topped this region in investments.
Four of the five biggest IPOs were Bay Area companies, led by Uber’s $75.5 billion debut.
The Bay Area pulled in $13.7 billion for 438 deals in the quarter.
Washington ranked No. 5 in deals, behind California, New York, Massachusetts and Texas. The state as a whole garnered $733 million for 52 deals, meaning the rest of Washington logged only 7 venture capital deals and about $64 million.
Nationally, U.S. venture funding totaled $55 billion at the midpoint of the year, ahead of the $48 billion for the same time last year.
Similar results come from the Dow Jones VentureSource report, with Seattle ranked fifth in deals and sixth in funding raised.
Both reports emphasize again the divide between winners and losers in the vital universe of startups and technology ventures. For example, Arizona, with roughly the same population as Washington, raised only $177 million for 15 deals. Alabama, $8 million for two deals.
Elsewhere in the Northwest for the quarter: Oregon $50 million for seven deals and nothing for Alaska and Idaho.
This chasm of fortunes helps explain why so many places chased Amazon HQ2 and give enormous incentives to data centers — the low end of the tech food chain — that create few jobs.
• CBRE is out with its new Tech Talent scorecard. Using 13 metrics, the study ranks Seattle overall second behind San Francisco and ahead of Toronto. Portland ranked No. 16. In educational attainment, Seattle comes in first, with nearly 63% of adults with a bachelor’s degree or higher (the national average is 31%).
• Remember your part-time or summer job in high school? Fewer American teenagers will. According to the Hamilton Project, teen labor-force participation has dropped sharply from its peak in 1979. No single factor is behind the change, but you can read about the drivers here.
• Washington’s unemployment rate was 8.1% for the four quarters ending in March. Don’t panic. This figure uses the U-6 measure of the federal Bureau of Labor Statistics. This includes people no longer actively looking for work and those employed part-time who want a fulltime position. National U-6 was 7.6 percent.
The “official” unemployment rate is U-3, a narrower metric. (Washington’s U-3 was 4.6% in June; 2.9% in King County. In 2010, coming out of the Great Recession, Washington’s U-6 was 18.4%