Venture capital investment slows in Pittsburgh, report shows
Venture capital funding in Pittsburgh has slowed after years of impressive growth.
Startup companies in the Pittsburgh area raised only $13.7 million in the second quarter of 2018, according to the most recent PwC and CB Insights MoneyTree report.
The area has seen only seen $43.8 million invested by venture capital firms this year, the lowest midyear mark in nearly a decade. Startups in Pittsburgh had raised nearly $80 million halfway through 2017 and more than $100 million at the midyear mark in 2016, according to past PwC and CB Insight data.
Audrey Russo, head of the Pittsburgh Technology Council, said the low venture capital numbers concern her but she added that VC dollars aren’t the only way to measure the health of Pittsburgh’s startup and innovation scene.
“It shows that we are still struggling with the world knowing what the opportunities are here,” Russo said at the drop in venture capital funding.
Tom Ciccolella, head of PwC’s US Venture Capital division, said 2018 may look lackluster compared to the blockbuster 2017.
“2017 was the third largest year ever for financing in VC-backed firms,” Ciccolella said. “So, 2018 looks less robust by comparison.”
Last year was a blockbuster year for the Pittsburgh area with startup companies taking in a decade-high $302 million in funding. Big deals — $93 million Petuum, $62 million to Complexa, $25 million to Duolingo — ate up large chunks of the money.
But venture capital funding only tells part of the story. Russo said strategic partnerships between Pittsburgh startups and large, established, cutting-edge corporations don’t make it into the quarterly and annual venture capital reports.
Both Boeing and Airbus partnered with Near Earth Autonomy last year on self-flying aircraft. Carnegie Robotics has partnered with Nilfisk, a leading floor-cleaning company, and Swift Navigation, a GPS startup. Volkswagen, Hyundai and BYTON, a Chinese electric-car company, have signed deals with self-driving car startup Aurora Innovation. Relationships between Facebook, Microsoft, Google and other major tech companies bring in loads of cash for research at Carnegie Mellon University and University of Pittsburgh.
Russo said the engineering centers and research labs set up by Facebook and Bosch around artificial intelligence, Sony for robotics and Amazon for translation add to the value of the region.
“The key piece is for the world to know about the deals that are occurring here and the technologies that are erupting here,” Russo said.
Second-quarter venture capital funding is historically low in Pittsburgh. Deals generate lots of money at the beginning and end of years.
Aaron Aupperlee is a Tribune-Review staff writer. You can contact Aaron at 412-336-8448, firstname.lastname@example.org or via Twitter @tinynotebook.