It was a solid year for venture capital investing in Oregon and Washington as investors pumped a total of $1.18 billion into 208 deals, according to data compiled by PitchBook. That was down slightly in terms of deals and dollars compared to 2012, when $1.42 billion was invested in 232 deals in the Northwest. However, it was up when compared to 2009, 2010 and 2011 when dollar totals finished under $1 billion and deal totals did not top 200.
In fact, 2012 and 2013 marked the only occasions that deal totals surpassed 200 in the past nine years. That’s good news for entrepreneurs, signaling that more deals are now getting done.
One potentially disturbing trend, however, is that the Northwest is losing market share when it comes to venture capital. In 2004, 5.9 percent of global venture capital dollars flowed to companies in Oregon and Washington. However, that number was just 2.4 percent in 2013. The percentage of deals also has declined in the past decade. In 2013, 3.4 percent of all VC deals were in Pacific Northwest companies, which compares to 4.7 percent in 2004.
I’ve written in the past about this issue, arguing that there’s a lack of venture capital available compared to other regions. The statistics from PitchBook indicate that — while investments and deals are increasing— other regions are grabbing a bigger slice of the pie. (I’ve reached out to PitchBook to see where that’s occurring and will update as I hear more).
UPDATE: PitchBook offered this table showing the regions that are seeing bigger percentage gains in terms of capital allocations, and not surprisingly New York has boosted its share in the past decade, doubling from 3.3 percent to 6.6 percent. Europe also has seen a big boost, while Seattle has pretty much stayed the same. The Bay Area, meanwhile, has seen its share drop from 33.5 percent to 27.1 percent.
Correction: The chart above represents the dates 2009 to 2013, not 2004 to 2008 as shown.
One of the challenges, as shown in the graphic at the top of this story, is that there’s just one dominant venture capital firm in the Northwest. Madrona Venture Group completed 16 deals in 2013, with Voyager Capital the next traditional firm on the list.
The region would be well served to see a few other firms emerge, deploying capital in the critical series B and series C stages.
Software remains the biggest industry sector in the Northwest for venture capitalists with $470 million invested in 99 deals. There were 12 pharmaceutical and biotechnology deals that garnered $244 million last year.