After reaching record levels in late 2019, VC funding for Pacific Northwest startups fell moderately in April, but not as much as it did nationally. (GeekWire Chart, via Startup Fundings tracker.)

Venture capitalists are typically known for their optimism. But that core belief was shaken during the month of April as COVID-19 forced startup investors to tap the brakes on investing.

As the chart below shows, U.S. venture capital investments fell a whopping 46% from March to April. April’s total of $7.3 billion in investments nationally was down 43% compared to April of last year. The number of deals also slowed, dropping to 600 deals in April. That compared to 867 deals in March, and 1,060 deals in April 2019, according to PitchBook data.

The national numbers confirm a recent report from the National Venture Capital Association, which predicted a “bumpy ride” ahead for startups seeking venture capital funding.

Venture capital totals sunk across the U.S., but held up in Washington state on the strength of health care and biotech. Source: PitchBook

In Seattle and Washington state, the picture wasn’t quite as bleak. In fact, April’s totals — $190 million invested in 21 deals — outpaced the months of January and February, prior to the coronavirus pandemic taking root in the U.S. Of course, it is difficult to discern trend lines on a month-to-month basis with such a small sample size. But looking behind the Washington state numbers for April actually points to an interesting data point.

The top three companies raising money last month — 98point6, Avalyn and Blaze Bioscience — operate in the health or life sciences arena. Together, those three Seattle companies raised $101 million, or more than half of the month’s entire haul.

Avalyn, led by noted biotechnology entrepreneur Bruce Montgomery, is developing therapies for severe respiratory diseases. 98point6 is creating new telemedicine products, and Fred Hutch spin-out Blaze Bioscience is using a novel approach to identifying brain tumors.

GeekWire’s funding tracker of Pacific Northwest deals, which includes companies in Washington, Oregon and British Columbia, shows a relatively stable level of funding, $171.5 million invested across 18 companies for April. That was down from April 2019 ($265 million) but ahead of April 2018 ($100 million). It was also down compared to February and March of this year, but up slightly compared to January.

The challenge is likely ahead. It’s unclear how many companies rushed to close financing deals in March and April, sensing that funding sources would be drying up in the coming months. Some investors also may go into triage mode, cutting losses on startups that have yet to show traction and doubling down on those startups gaining momentum.

As the chart at top shows, massive amounts of money flowed into startups in the Pacific Northwest in the latter half of 2019. It seems unlikely that those levels will be reached given the current state of the economy.

As we’ve written in the past, COVID-19 does not treat all industries or companies equally. While travel-dependent companies like Rover and Airbnb are cutting staff, the disruption is creating huge opportunities for a host of others who are seeing a quicker shift to digital offerings, telehealth services, online education products or medical innovations.

Venture capitalist Bill Gurley summarized that sentiment, responding to a Recode story titled “The layoffs at Airbnb cast a dark shadow over Silicon Valley.”

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