Washington state this year saw venture investments rise to levels not seen since before the Great Recession.
Venture-capital funding in Washington state got off to a strong start this year, with the first quarter pulling in almost half 2014’s total funding, making it the largest quarterly amount since before the Great Recession, according to one of two venture-capital reports coming out this week.
State companies attracted $633.6 million in 26 deals in the first quarter of 2015, more than eight times more venture funding than the first quarter of 2014, and an almost 24 percent jump in the number of deals for the quarter, according to the Dow Jones VentureSource report being released Thursday.
This is the largest quarterly amount since the third quarter of 2006, which brought in $1.09 billion.
Jeff Grabow, a U.S. venture-capital leader at global accounting and consulting firm Ernst & Young, said Washington has created a good ecosystem of talent, money and advisers through companies having successful initial public offerings, which in turn brings in more venture-capital funding.
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Seattle cancer-immunotherapy company Juno Therapeutics, for example, raised hundreds of millions in venture capital during 2014 and went public on Dec. 19, 2014, raising $264.5 million.
“It creates an ecosystem of people who have been through it, who like to build things, and they go on and do other things,” he said. “Capital flows to that … If there is no ability to innovate, there is no need for venture capital.”
Six deals made up more than two-thirds of the state’s first quarter of venture-capital funding, for a total of $454.5 million. Grabow said this is in line with a trend across the nation, with more dollars going to later stage companies that are “getting ready for explosive growth.”
Nationally, venture capitalists invested $15.7 billion in U.S. companies, a 27 percent increase from the first quarter of last year. However, the U.S. had 875 deals in the first quarter of this year, an almost 9 percent drop from the 960 deals for the same period last year.
According to the Dow Jones report, Bellevue-based software company SourceCode Technology Holdings, known locally as K2, brought in the most funding in Washington for the quarter with a $153.5 million later-stage funding round. That deal accounts for almost a quarter of the state’s total funding.
Cyanogen, a developer of an Android alternative for device makers, received $80 million in later-stage funding, the second largest amount.
Because large deals can often skew data and there are always ebbs and flows from quarter to quarter, Grabow said he does not like to focus too much on a single quarter.
However, even with the top six deals eliminated, the state’s first quarter is still the largest first quarter since 2007.
“It was a great first quarter,” he said. “Historically what we see is a Q1 dip … but Washington has seemed to buck the trend in that regard.”
Washington’s information-technology sector claimed the largest amount of investment dollars, pulling in almost $268 million. The consumer-services sector followed with $132.7 million in funding and business and financial services were not far behind with $110.7 million.
Business and financial services led the quarter for the number of deals, nine, followed by IT with seven, and five for consumer services.
The health-care sector led venture-capital investments in the U.S. with almost $3.9 billion, followed by $3.73 billion in business and financial services and $3.68 billion in consumer services.
IT led with 240 deals followed by business and financial services with 230 and health care with 185.
Nationally the top deal for the quarter was California-based Space Exploration Technologies with $1 billion. Lyft, the California ride-services company, received $530 million, the second- largest amount. Other well-known companies made the top 10, including Pinterest, which was the fifth-largest, bringing in $367.1 million, and Snapchat which ranked 10th, receiving $200 million.