Jul 14, 2022 - Business

Triangle startup funding still strong, highlighted by Epic Games

Venture capital invested in the Raleigh-Durham metro area
Data: PitchBook; Chart: Thomas Oide/Axios

Support for the Triangle's tech scene is going strong so far this year, despite a national slump in venture capital.

  • Triangle startups raised $2.4 billion in the second quarter of the year, up 540% from the same period last year, according to funding data from PitchBook, a venture capital tracking firm.

Of note: Of the $2.4 billion raised in the Triangle, $2 billion went to Epic Games, the Cary-based video game company behind titles such as Fortnite.

  • If you excluded Epic — which at this point is operating in a different stratosphere than most other startups — funding would still be up 9% year over year.

Why it matters: The tech industry is a major driver of the local economy.

  • A slowdown in investment money could lead to fewer startups becoming large employers or even layoffs.
  • A few local startups, like Adwerx and Policygenius, have all recently cut headcount, citing a challenging economic climate.

What they're saying: Kyle Stanford, an analyst at PitchBook, tells Axios that the Triangle is doing well for its size, and notes local investment groups have strengthened. Bull City Venture Partners and the Triangle Tweener Fund have both recently raised money.

  • “There's been a lot of growth outside of the major tech hubs” in the past few years, Stanford says. "It's places like Raleigh, Portland and Seattle and Chicago that have seen a lot of growth."

Details: After Epic's $2 billion haul, these startups raised the most money in Q1:

  1. JupiterOne, a Morrisville-based cybersecurity firm, raised $70 million and reached a valuation north of $1 billion.
  2. Teamworks, a Durham maker of software for sports teams, raised $50 million. PitchBook pegs its valuation at $275 million.
  3. Baebies, a Durham newborn disease screening company, raised $50 million.
  4. Locus Biosciences, a gene-editing company in Research Triangle Park, raised $35 million.

Zoom out: U.S. startup investment fell 23% in the second quarter, to $62.3 billion, according to PitchBook. That's the steepest drop since 2019, The New York Times reported.

  • Stanford says that the comparison to last year is a little unfair, as 2021 was a record year. And despite a decrease, investing activity across the country has still been strong, especially for companies in their earliest stages.

Yes, but: Stanford says it's not clear if investments will recover right away.

  • "I'm sure there'll be a further slowdown over the rest of the rest of the year, especially as we see inflation continue to rise and higher interest rates. But it takes a while to filter through the venture market."

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